Brazil breaks free from the dollar

Xi Jinping and Vladimir Putin have unleashed a global rebellion against the dollar. Brazil and ASEAN in turn join the rebellion against the imperial currency.

Brazil accepts the yuan

Brazilians and Chinese no longer need to go through the dollar to trade with each other. The two central banks signed an agreement on Wednesday in Beijing.

It will allow China and Brazil to trade without intermediaries. The two nations will be able to pay for their imports in their own currencies, the yuan and the real. It will no longer be necessary to convert them first into dollars.

In addition, Brazilian banks will use the Chinese payment system CIPS instead of the SWIFT network.

President Luiz Inácio Lula da Silva was originally scheduled to attend, but pneumonia forced him to cancel his trip. Several announcements are therefore postponed to a later date.

But the main thing is there. Breaking free from the dollar was a campaign promise corroborated by the recent doubling of Brazil’s gold reserves (130 tonnes of gold).

In addition, Brazil’s central bank has been reducing its dollar and euro foreign exchange reserves since last year. Those denominated in yuan, on the other hand, quadrupled.

Another unmistakable sign: the substitution of Chinese imports of American corn by Brazilian corn at the end of last year. China is Brazil’s largest trading partner. And this for more than ten years now (~150 billion $ per).

Things settled down again with the proposal in the year by the Brazilian president of a common currency in MERCOSUR. Hyperinflation in Argentina, however, makes the project difficult.

ASEAN also wants to cut ties

According to the news magazine Tempothe Association of Southeast Asian Nations (ASEAN) also wants to reduce its dependence on the dollar, the euro, the yen and the pound sterling.

ASEAN includes Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam and Brunei. It is a regional alliance for economic and security cooperation.

An official meeting of finance ministers and central bank governors began on Tuesday in Indonesia. In particular, they will discuss the transition to settlements in local currencies via Regional Payment Connectivity (RPC).

“Efforts to reduce reliance on major international currencies through a system of local currency transactions will be reviewed. This is an extension of a system already implemented among ASEAN members”can we read.

As a reminder, Indonesian President Joko Widodo has already urged the bloc to emancipate the Visa and Mastercard payment systems.

“Abandoning Western payment systems is Bitcoin will be king, sooner or later. Necessary to protect transactions from ‘possible geopolitical repercussions’he said in February.

Dodit Proboyakti, a board member of the Indonesian Credit Card Association (AKKI), said Indonesia would learn from Russia’s experience and its Mir payment card system. .

Speaking of Russia

All regions of the world rush behind the Sino-Russian tango. The intentions of Russian Foreign Minister Sergei Lavrov are crystal clear:

“The entire world order is being redefined. It is not just what is happening in this or that part of the world, whether it is near or far from our border. At the moment it is decided how the world will be arranged in the future, and for a long time. »

One of the consequences of dedollarization will be a decline in foreign exchange reserves denominated in dollars. This will result in a decline in the dollar exchange rate. And therefore inflation in the United States.

Over the past 25 years, the share of the dollar in foreign exchange reserves has fallen from 72% to 59%. That of the euro is around 20%. More crucially, “other” currencies, including the yuan, rose from 4% to 10%.

So much so that the overall amount of foreign exchange reserves fell by 10% between 2021 and 2022. That is the equivalent of 10,416 billion dollars (of which nearly 7000 billion in $).

In other words, nations no longer want a slate from other nations. The freezing of the $300 billion belonging to Russia seems to have given the rest of the world pause.

However, if these dollar reserves were to disappear, they would have to be replaced by something else. Gold at first, probably.

But in a fragmented monetary world, with no liquid stores of value that can travel at the speed of light, Bitcoin will be king sooner or later.

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