Lu Yi: Can the ＂BRICS Yuan＂ that has not been mentioned by the BRICS declaration ca

Source: Hong Kong 01

Author: Lu Yi

The "BRICS Corporation", which has attracted much attention before the South African BRICS Summit, did not appear in the last BRIC Declaration.Before the meeting, Anel Sukras, a special envoy of South Africa Asia and BRICS Affairs, said in an interview with Bloomberg that the summit will discuss the issue of using the local currency in trade between member states, the focus is to establish a common payment system, etc.issue.At the same time, the summit may also discuss the establishment of a technical committee to consider planning potential common currencies.Brazilian President Lula also called on the establishment of common currencies during the BRICS summit in South Africa.

During the meeting, the West pays great attention to this.Although Sukras said: "The agenda of the BRICS countries did not de -US dollar agenda projects, and the BRICS countries did not call for the US dollar."Lula also said that the implementation of common currencies is not to replace national or "resist" US dollars, but to promote trade between BRICS countries.But objectively speaking, the launch of the new BRICS reserve currency in the future will definitely shake the US dollar hegemony.In fact, Leslie Maasdorp, chief financial officer of the BRICS Development Bank, stated last month that the development of a common currency in the BRICS country to challenge the US dollar is a medium and long -term goal.

However, the 15th Declaration of the Leaders of the BRICS countries only proposed: "We recognize the extensive benefits of fast, cheap, transparent, safe, and inclusive payment system.BPTF) Report on promoting the Group of 20 in the BRICS countries to improve the elements of the elements of cross -border payment roadmap. We welcome members of the BRICS countries to share the experience of payment infrastructure such as cross -border payment system interconnection and interoperability. I believe this will further strengthen goldCooperate between brick countries and encourage further dialogue on payment tools to promote trade and investment between members of BRICS countries and other developed countries. We emphasize that encouraging BRICS countries with their trading partners when conducting international trade and financial transactionsThe importance of using the local currency. We also encourage strengthening the network network between BRICS countries and promoting the settlement of the local currency. "

Why is this?Construction of "BRICS"

In the past period of the cycle of the US interest rate hike and US dollar appreciation in the past period, emerging markets have become more and more fragile due to its affected economy, and the hope of reducing US dollar dependence on emerging markets has become stronger and stronger.On the other hand, the Ukrainian War Western financial sanctions on Russia's nuclear military -level martial arts have further triggered the need for emerging market countries to establish an independent financial system in the West and reduce the potential risks of "US dollar sanctions".

In fact, in bilateral trade, the five BRICS countries have also begun to set up a local currency trade settlement.At present, more than 70%of the trade settlement between Russia and China has switched to RMB and ruble settlements.China and Brazil have also signed a settlement agreement.In Russia and India's local currency settlement negotiations, Russia proposed to use RMB to replace the US dollar settlement. Although the negotiations failed, Indian refineers have begun to use RMB to settle some Russia imported crude oil.

In this context, the voice of the BRICS currency is very high.Earlier reported that the BRICS five countries were preparing to discuss a new "common currency".However, the "single currency" that distinguishes the original currency of the euro zone national currency, it will exist with the local currency of the BRICS countries.

Many people suggest that this new common currency is linked to some large commodities including gold and rare earth prices to ensure the stability of the currency value.It is also recommended that new common currencies to develop the functions of Special Drawing Right (SDR; also known as paper gold) that are similar to the International Monetary Fund.The special withdrawal right is allocated according to the shares of the members of the International Monetary Fund organizations, which can be used to repay debt and make up for the international revenue and expenditure deficit between members.Its value is determined by the reserve currency of the US dollar, euro, RMB, yen, and pound. The composition of the composition is changed by five years. The current basic currency baskets are 43%, 30%euros, 12%, 7.6%of the basic currency basketsJen and £ 7.4%.Argentina has recently used special withdrawal rights and Renminbi to pay $ 2.7 billion in foreign debt to the International Monetary Fund. This is also the first time that Argentina has used RMB to pay foreign debt.

A currency not only has a valuation, cross -border settlement payment function, but also the investment and financing function, and the value storage function as a reserve currency.If the BRICS countries can take the first step, launch the common currency of trade pricing and settlement between five countries, and set up a payment system to solve the problem of free flow of funds.The influence of the dollar fluctuations will break away from the high cost of US dollar transactions.

In 2015, the Vietnamese brick country began to prepare to jointly establish a new development bank, also known as the BRICS Development Bank. We generally call BRICS Bank.The purpose of the BRICS Bank is to facilitate the trade settlement and loan business between the BRICS countries, reduce dependence on the US dollar and the euro, and effectively guarantee the circulation and trade between member states.The investment focus of the new Development Bank is clean energy and energy efficiency, transportation infrastructure, water and sanitation facilities, digital infrastructure, environmental protection and social infrastructure. So far, it has provided about $ 33 billion in about 100 projects in the five countries.Loans and absorbed the UAE, Egypt, and Bangladesh as new members.This is the "infrastructure" of the "BRICS", but so that it is far from the feasibility of "BRICS".

First of all, if a region and organization want to establish a common currency, economic integration is a prerequisite.In short, it must be free trade, and this degree of freedom is extremely high.The primary condition for the establishment of a unified currency in the BRICS country is free trade.So, what is the current situation?Obviously it was not done.As early as 10 years ago, in the 2013 South African Duban Summit, Xi Jinping had put forward the idea of a "integrated market" in his speech, and the BRICS countries must move towards the goal of the "integrated market".But 10 years later, obviously have not yet done it.There are differences in the views of economic, trade and financing issues.Economic and commercial competition between some countries, especially the competition between India and China.

In addition, unified currencies need to be very different from the strength between member states.As far as the euro zone is concerned, due to the relatively developed Britain of Germany and France, other countries have a lot worse than the strength of the four countries. Therefore, the emergence of the euro is to some extent.The five countries of the European pigs almost pulled the EU water, and Britain was indignant to Brexit because of dissatisfaction with this unevenness.Now the economic strength of the BRICS countries is uneven. If other countries come in, the gap between member states will be even more disparate.

Economys of the five BRICS countries have huge differences in economic composition, monetary policy, trade, growth, and financial openness.China is an economic superpower, and India is a potential economic superpowers. Brazil, Russia, and South Africa are three economic export countries with some stagnation.Russia's economic performance in the past year is obviously the weakest, but the economy of Brazil and South Africa also has absolute weaknesses. It requires strong commodity prices to support it. It also relies on foreign capital flows to make up for its fiscal deficit.China is the main trading partner of the global commodity exporter and the most dominant force in the BRICS countries. The industrial cycle of the commodity export country clearly follows China's economic cycle tide.The continuous trade deficit between India and South Africa and other BRICS countries has also caused trade imbalance between countries.India has proposed concerns, worrying that the launch of common currencies will only further increase the dependence of countries to China.rely.

Finally, there must be a common settlement mechanism.This is actually to connect the settlement system between the currencies of various countries.For example, China's RMB cross -border payment system CIPS, Russia's financial information transmission system SPFS, Indian rupee international trade settlement system INR, etc., to turn the system into a BRICS settlement mechanism for SWIFT.This process is protracted.

So as the Russian Ministry of Foreign Affairs said, this may be a very complicated process.

Compared with the common currency, the settlement of the currency may be more suitable for the BRICS countries.First of all, the settlement of the local currency is a two -way choice between the country when trade between the country, and does not involve third parties.The import and export enterprises on both sides conduct transaction settlements in their national currencies.Currency swaps are carried out by the central bank of the country to support and liquidity for the settlement of the local currency.For example, the RMB and rubles carried out by the People's Bank of China with the Russian Bank of Russia.

Secondly, you can follow the settlement system. There is no need to establish a special channel, which has a small impact on the international currency pattern.In the later period, the central bank of the two parties can launch a cross -border payment system to achieve two -way cross -border capital flow and settlement.Such as the cross -border payment system of Chinese and Russia and Russia.Relevant financial institutions can issue settlement tools in the other party's market, allowing domestic enterprises to directly hold and use the other's local currency for transactions and settlement.

In addition, you can choose in a strong currency, use strong currency as a medium to maintain the stability of the currency value.Sino -Russian trade has settled more than 70%of the local currency; China signed an agreement with Brazil to agree to use the local currency in bilateral trade; energy transactions between China and Saudi Arabia and Iran have also begun to use RMB; India and Indonesia also reached an agreement.Rsdorblon settlement; trade settlement between Russia, India, India, and Russia is trying to use the local currency and use RMB settlement many times ...

Among many currencies, the RMB value is stable, and the advantages are highlighted, and more and more are used as intermediate currencies, or the two parties to the trade are settled directly with RMB.If the currency of the brick country is linked to the RMB and then the trade settlement is carried out, then the problem of exchange rate fluctuations and losses will be reduced a lot, and the renminbi will become the steady stone of trade in other countries.

It can be seen that in fact, the BRICS countries have noticed the above problems, so in the common declaration, it is emphasized that "promoting the settlement of the local currency" instead of rashly proposing "BRICS".

"BRICS Yuan" will be a very complicated process.At this stage, what the BRICS countries can do may just promote the settlement of the local currency, or push the relative advantage currency such as the RMB to the front desk.The internationalization of the RMB is still the most jealous of the US dollar hegemony.However, in any case, the BRICS countries have begun to discuss the establishment of new common currencies, which has stated that many countries around the world have awakened and have launched impact and challenges to the US dollar hegemony.