last month the bricks countries held their annual Summit in Kazan Russia where they announced a new payment system and development funding with non-usd currencies they also invited 13 countries to join the club now if you didn't hear about all this it's not just you it seems that the media wasn't Keen to report on the growing ties between the so-called Global South countries and the challenge they could pose to the us-led world order that that's why today we're going to summarize what happened at the recent bricks Summit and tell you exactly what it could mean for
the US dollar and for the future of the world this is a video you don't want to miss let's begin with a quick recap the bricks is a club of countries including Brazil Russia India China and South Africa on the 1st of January 20124 Ethiopia Iran Egypt and the United Arab Emirates officially joined the bricks after they were invited to join last year we'll come back to the new brics members a little later on though now contrary to popular belief the bricks is technically not an organization it has no official structure no official headquarters and
doesn't even have an official website if you've been keeping up with our coverage of the brics you'll know bricks may become an actual organization though once it gets bigger you'll also know that the bricks countries established the new development bank which is analogist to the international monetary fund or IMF for context the IMF gives loans to developing countries which often come with strings attached the new development Bank basically does the same but with better conditions on its loans the new development Bank also known as the brics bank is one of many initiative that the brics
countries have put together since the block was made official in 2009 naturally these initiatives have been announced at the brics annual Summits which have been grow growing in attendance in recent years this year's bricks Summit was the first to feature the four new members and reportedly included top officials from an additional 32 countries including the OG bricks countries of course when you combine the populations of these countries together nearly half the world's population was represented to put things into perspective the G7 countries only account for around 10% of the world's population this is telling a
it underscores the fact that most of the world is not on board with the political and geopolitical attitudes of Western countries this is presumably why the Western media was largely silent about this year's brick Summit most of the world is not on their side when it comes to key issues more importantly the number of countries that disagree with the us-led world order is growing nearly 50 countries are looking to formally join the bricks according to Wikipedia this is due to a combination of factors the most pressing of which is the increasing weaponization of the US
dollar-based Financial system of course the watershed moment was Russia's assets being seized after its invasion of Ukraine in 2022 but in retrospect this was just one of many instances where the US dollar Financial system was weaponized against enemies of the US naturally this has incentivized the creation of an alternative Financial system key words there alternative Financial system if you watched our recent video about the bricks currency you'll know that the bricks are not looking to create a currency that will compete with the US dollar rather they're looking to create a financial system that competes with
the likes of Swift to that end the bricks have been working on multiple Pilots such as embridge which is based on ethereum's technology and uses wholesale cbdcs at this year's bricks Summit they revealed brics pay which can be simply understood as a direct competitor to Swift no cbdcs and it's just one of many major announcements that were made by the bricks countries and by the way if you're enjoying the video so far be sure to smash that like button and subscribe to the channel so you don't miss the next one hey everyone sorry to interrupt
the video but I just want to very quickly tell you about the coin Bureau deals page this is the place where we put together all the amazing deals and promos that were able to offer you guys exclusively as viewers of this channel head on over and you will find such things as discounts on Hardware wallets some seriously impressive trading fee discounts on some of the best exchanges as well as some frankly mindboggling signup bonuses for some of those exchanges too the link is down below check it out when you have a moment thank me later
and now back to the video bricks pay has apparently been in development since 2018 but wasn't publicly launched until last month's Summit the official bricks pay website almost reads like a crypto white paper probably because it's based on crypto esque Tech developed by a Russian University quote the Breton Woods era Global Financial system is undergoing a significant transformation we are witnessing Rising Global debt increasing wealth inequality and the fragmentation of trade and finance systems our goal is to ensure equal access to financial Technologies and Global wealth providing everyone with the opportunity to reach their full
potential today we begin building a new fair and decentralized financial system for the future per the bricks pay website this financial system includes the bricks pay QR code app for retail users the bricks pay B2B solution for institutional users a digital currency that will be used within the bricks pay ecosystem a traveler Rewards program and a system for the crossborder settlement of Securities only brics pay QR and Bricks pay B2B seem to have launched though with the other three products still in development and you can actually find a demo of bricks pay QR on the
bricks pay YouTube it's possible to download on Android and iOS devices without the app stores and will soon be available via telegram under the hood brics pay uses a decentralized network of nodes operated by a Consortium of financial institutions including Banks what's interesting is that its list of members is kept private and this makes us wonder if it's possible that institutions outside of the bricks are also participating in this network this would explain why the IMF reportedly began asking questions about bricks pay shortly after it was announced I'll quickly note that French banks have been
working closely with Chinese Banks to the point that it started to raise questions in the US and it looks like UK banks have been involved too anyways back to the architecture now according to the brics pay website the network of nodes operated by the Consortium can be configured to create both domestic and international payment systems called subgraphs Wikipedia notes that bricks pay can process up to 20,000 transactions per second with zero fees on that note the Wikipedia article about bricks pay suggests that it's currently limited to domestic transactions this is further suggested by the fact
that Bri bricks pay QR currently leverages Russia's payment system only something seemingly confirmed by Russian President Vladimir Putin in a press conference speaking of which it was fascinating that the first question Putin got at his bricks Summit press conference was about brics pay in his answers Putin revealed that the new development Bank was helping with the global rollout of brics pay something we predicted would happen in earlier videos so this begs the question of when brics pay will be rolled out on a global scale the answer can be found in the 2024 brics Business Council
report on the bricks pay website it looks like the goal is to have brics pay available to all brics members by the end of next year when Brazil will hold the bricks chair as a fun fact Brazil has been one of the most vocal supporters of creating an alternative Financial system for the bricks this would help explain why crypto adoption is so high in the country however The Business Council report notes that it was India which put together the bricks pay task force in 2021 in turn the cazan Declaration which was adopted by all brics
countries at the summit includes a provision for brics countries to work together on making brics pay International with the help of the brics pay task force taken together this suggests a full brics pay rollout in the next couple of years but back to the new development Bank now the only thing more fascinating than Putin's comments about brics pay was the speech given by brics Bank president Dil Mar Rusev that's because the first thing she talked about was the high interest rates in the United States and the Federal Reserves recent rate cuts for reference most of
the world's debt is denominated in US Dollars when interest rates in the US rise these dollar debts become more expensive this is hard for individuals and institutions in the us but is even harder for individuals and institutions overseas because their countries can't print US dollar in Practical terms this means that local currencies often need to be sold for US dollars to pay the higher interest rates on dollar denominated loans obviously this selling causes the value of those currencies to drop this creates very high inflation that hurts the economy making it even harder to pay US
dollar debts if you've been keeping up with our coverage of the Federal Reserve you'll know we've speculated on the possibility that it was Raising interest rates aggressively to put pressure on global South countries to Ally with the US consider that there were a record number of IMF bailouts in late 2022 due to Rising interest rates I'll quickly remind you that all those bailouts came with strings attached regardless we seem to be on to something because dilmer essentially alleged the same thing in her speech the FED is is not raising rates to fight inflation it's raising
rates to crush America's enemies she also highlighted additional pressures coming from things like Europe's weakness and the conflict in the Middle East dilmer then revealed something crazy and that's that the new development Bank was facing serious financing issues before she took the helm in 2023 since that time Dilma has managed to raise over 122 billion for the brics bank most of which seems to have come from China and the Middle East logically These funds will be spent on development in developing countries and dilmer expects 10 of this 12 billion to be spent over the next
year alone notably the brics bank is looking to give more development loans in non-usd currencies so that they're easier for borrowers to pay back as such the brics bank is aiming for at least 30% of its loans to be issued in non-usd currencies in the future and Dilma revealed that it's already close to hitting that Target news flash but giving developing countries loans in their own currencies will make them more willing to play ball with the bricks this arguably makes the new development Bank the most important part of the bricks strategy even more so than
bricks pay or a potential brics currency if you need evidence of that look no further than the fact that dilmer was the first person who Putin met with in Kazan on the first day not Z not Modi dilmer although their meeting was Private the brics bank gave a summary of its contents on x quote their discussions focused on local currency financing the challenges of indebtedness faced by developing countries and the need to expand bricks to foster a more interconnected and financially stable Global South translation their conversation focused on getting away from the US dollar in
every possible way this was reiterated in the summary of the meeting published by the Russian government where D told Putin quote as you have noted we have indeed implemented and allocated a substantial amount of funds towards a variety of projects however this remains insufficient relative to the needs of the global South therefore it's crucial to provide funding in National currencies and in specialized formats lo and behold the Kazan declaration contains a provision about the new development bank which specifies that it will focus more on local currency financing with the help of bricks countries it will
also add more members to the brics bank which currently consists of 10 bricks Affiliated countries and this ties in to all the countries that are getting involved with the Bricks now the first one we need to mention is India which might sound odd given that India is already part of the bricks The crucial I in the acronym for those unaware India has had some issues with other bricks countries mainly China with whom India has had a long-running border dispute well Indian Prime Minister Narendra Modi met with Chinese president zi jingping for the first time in
five years at The Brick Summit in Kazan and they managed to reach an agreement about that border dispute mury even met with Iranian president Maud pesan about expanding trade between India and Iran now this is extremely significant because India has long been perceived as being somewhat neutral in the geopolitical tensions between the East and the West some have even gone as far as to claim that India would be on America's side against China precisely because of that multi-year border dispute Mod's recent actions suggest the exact opposite is happening India is deepening its ties with not
just China but Iran which is one of America's number one enemies this might have something to do with the fact that the US and its allies have been putting pressure on India for working with Russia the EU actually sanctioned India for the first time earlier this year because of its Russian Partnerships and this is where things get truly interesting the fact that India is moving closer to China and Iran suggests that it doesn't care about the threat of sanctions from the US and its allies the fact that Modi flew in person to Russia is further
evidence of this the same is true of every country that attended the summit as mentioned earlier this is because of Russia's invasion of Ukraine but it's not because of the sanctions per se you see when the Western world started sanctioning Russia everyone assumed that Russia would implode this didn't happen and by some metrics Russia's economy is actually growing from our perspective this showed the world that it was possible to survive Western sanctions in other words it showed the world that the East doesn't need the West as much as believed this is ultimately why so many
countries are trying to join the bricks they're realizing it's possible to go their own way as mentioned in the introduction 13 countries are now under consideration for future bricks membership these are turkey Indonesia Algeria bellarus Cuba Bolivia Malaysia usbekistan Kazakhstan Thailand Vietnam Nigeria and Uganda they have all been added as partner States now to refresh your memory the bricks also invited Argentina and Saudi Arabia to join the club last year but the former declined and the latter hasn't decided yet as another fun fact Algeria is the only other country besides Argentina to decline a brics
invitation but there was a bit of drama in algeria's case tldr Algeria wanted to be invited to join last year but wasn't so it declined to join well at least for now as for Argentina it declined to join the bricks after Javier Malay was elected late last year Javier explained that this was because of differences in geopolitical alignment and added that quote our geopolitical alignment is with the United States and Israel we are not going to Ally with Communists so this leaves Saudi Arabia which seems to be somewhat on the fence some believe that Saudi
doesn't want to join the bricks because it doesn't want to distance itself from the US however a question asked at Putin's press conference by a Saudi representative suggests the real reason is a lot more nuanced in short Saudi Arabia wants bricks to become a Bonafide organization not just a club of countries that hang out and give loans to their allies via a shared International Bank oddly enough Putin seems to be against this as he noted that establishing an organization would create excessive bureaucracy this makes us wonder if the real reason why brics isn't an organization
has less to do with concerns about upsetting the US and more to do with the fact that it needs to move quickly if it wants to compete this means making decisions between leaders directly not indirectly via lengthy processes and bureaucratic wrangling such as you might find with an organization like I don't know the European Union so this brings me to the big question and that's what all of this means for the US dollar and the future of the world in case it wasn't clear enough most of the world wants to dollarize and that is bad
for the US dollar the thing is that this process is going to take a long time and that's mainly because of all the US dollar debt we can use Egypt as an example here Egypt is the second largest recipient of IMF loans these loans total 13 billion US and account for almost 10% of the foreign debt it owes paying back these US dollar loans is next to Impossible because Egypt has its own currency which has not surprisingly been collapsing the only way Egypt could get out of these debts without sending its currency to zero would
be to get more US Dollars via other means such as exports this route would take a long time and could likewise be next to Impossible if the interest rate on those US dollars is higher because of Federal Reserve policy Egypt could ask for US dollars from other entities besides the IMF such as the brics bank however you'll recall that the brics bank only raised $13 billion last year it would have to give all of this money to Egypt just to pay off the IMF loan and even then Egypt would still owe us dollar debts to
the brics bank alternatively Egypt could just opt not to pay back these IMF loans but that would tank The credibility of its government this would result in investors selling Egyptian bonds causing interest rates to rise to the point that economic growth becomes next to Impossible all while inflation continues to run rampant if you think about it the only way that Egypt and other countries with large US dollar debts can pay them back is for the US dollar to lose its value FYI this is exactly what's been happening money printing less use of USD in trade
and less use of USD in foreign exchange have been gradually eroding the usd's strength this gradual erosion will continue to the point that all countries can easily repay their USD loans but this assumes that they won't default on these debts or send their currencies to zero in the interim it'll also require their economies to continue growing relative to the usd's strength and the fed's interest rates and this relates to the future of the world which is where the bricks play a fundamental role as we've repeated in our videos about the bricks every country on the
planet will eventually have to ask a critical question which do you need more Commodities or the US Dollars required to buy them if you're a country with lots of Commodities like Russia then you probably don't need the US dollar as much as a country like Japan which has next to no Commodities and needs to import almost everything but countries like Japan can choose to partner with commodity producers rather than USD printers in case you haven't noticed what all the bricks countries have in common is that they are large commodity producers this makes it possible to
create a shared commodity-based economy that doesn't rely on the US dollar eventually this commodity-based economy will be stronger than the USD economy however this assumes that commodity prices will continue rising in the coming years now this isn't guaranteed but it is likely given how many people in the global South are entering the middle class when you recognize that your quality of life depends on how many Commodities you can use it becomes evident never mind the fact that commodity markets follow a historic IAL cycle which suggests we're about to see a huge commodity bull market if
this scenario plays out then it will eventually be possible for countries to shake off their US dollar debts and no longer be subject to the influence of the US and its allies but again this is a process that's going to take time and it's one that will be marked by lots of chaos but also lots of opportunity okay that's all for today's video if you found it informative be sure to smash that like button if you want to stay informed then subscribe to the channel and ping that notification Bell and if you want to inform
others about the bricks then be sure to share this video with them as always thank you so much for watching and I will see you in the next one this is Guy signing off [Music]
