[eXpat]

Interesting development, and, I suspect, not very good news for the dollar.
World Bank will work with proposed BRICS bank
$this->bbcode_second_pass_quote('', 'B')hubaneswar: The World Bank is looking forward to associate itself with the proposed development bank for BRICS, its President Robert B Zoellick said.

“If BRICs also creates an additional financial institution, we will be looking forward to working with it to see how we can leverage one another’s strength,” Zoellick told reporters on the eve of BRICS summit in New Delhi.

The World Bank chief was replying a question on a proposed development bank for Brazil, Russia, India, China and South Africa.

Terming proposal to set up a new development bank as a complicated venture, the World Bank President said: “I have seen over the years, putting together a new bank is a complicated venture. You have to get capital.”

....

“Organising such an institution, getting it capitalised, getting it set up is a challenge,” he said.

Developing countries could play a larger role in development in other developing countries, he said.

Zoellick said “one of the benefits of World Bank is that it involves much more than finance. We have staff, local experience around the globe in different sectors like private organisations and others.

“It (BRICS Bank) will complement the type of work we do and help in training and assist regional development banks in Africa, Asia, Latin America,” he said.

He said India required more funding though World Bank’s total outstanding loans remained at between $33 billion and $34 billion.

“For a country as vast as India, there is need for even more. In this context in a couple of days, I will meet the (India’s) finance minister,” he said, adding WB’s lending in the country would be discussed.

[eXpat]

BRICS members sign pact to trade in local currencies
$this->bbcode_second_pass_quote('', 'N')ew Delhi: Taking note of uncertainty in global political and economic situation, India, China, Russia, Brazil and South Africa on Thursday took the first step towards mutual trade in local currency and voiced strong opposition to any military action or rhetoric with regard to Syria and Iran.

At their Summit meeting, Prime Minister Manmohan Singh, Chinese President Hu Jintao, Russian President Dmitry Medvedev, Brazilian President Dilma Rousseff and South African President Jacob Zuma pitched for close coordination among the five leading economies to meet the challenges being witnessed in the global scenario.

After the Brazil-Russia-India-China-South Africa (BRICS) Summit, an agreement was signed under which credits would be extended in local currencies under the BRICS Interbank Cooperation Mechanism. Another pact signed was the Multilateral Letter of Credit Confirmation Facility Agreement between BRICS countries' Exim/Development Banks.

The agreements mark the initial steps for intra-BRICS trade in local currency.

[radon]

Far from being the "indispensable nation", the US, with their irresponsible tourist-like attitude towards the Eastern hemisphere landmasses, increasingly look like a liability for the inhabitants of those. The only remaining point of the "indispensability" - financial services courtesy of the dollar international status (umm... maybe also grain supplies? ) - has been compromised by the apparent willingness of the politicians to use the dollar's exceptional position, borrowing from their own vocabulary, as a "political weapon". This manifested itself in their recent closure of the access to dollar markets to Iran, expressing itself in banking sanctions, SWIFT's denial of service etc.

While subject to criticism, the dollar system has many advantages for everyone, as long as it is operated in a benign manner. Particularly, the US have proven that they are able to ensure smooth operation of the international trade and financial markets for so many years so far, and this is a remarkable achievement in itself. No surprise that the countries of the world are mostly happy with paying the US the "dollar-status" exchange fees/commissions when trading and investing internationally.

But the denial of service, as with Iran, undermines the very foundation on which this benign regime is built - its reliability and trustfulness. This is like rejection of your bank to pay your deposit or get a deposit from you because the bank have now decided that they dislike you. No doubt that the US may proceed in the same manner with any other country when and as they see expedient.

Unlike a non-renewable resource, like crude, financial services, if denied, can be replicated. BRICs (+Iran+...) are potentially self-sufficient in many aspects of international trade. There is nothing crucially "indespensable" that a third party could bring to them at this moment in time, or maybe in the near future. Therefore, potentially it makes a lot of sense for BRICs (+...) to introduce effective financial mechanisms that can be used in event of emergency like the said denial of service. This can be a "reserved" reserve currency ("yuan"/SDR?), and a SWIFT-like alternative service. This can be later extended to other US-centric systems, like the Internet.

[SeaGypsy]

Benign, like a leech which 'only' sucks 1.5% of it's victim's blood, only when it chooses to do business with another victim? BS

[Novus]

The BRICS Bank is something that would completely change the world. You guys should really check out the Money Masters documentary or the Zeitgiest documentary. Both of those are long but this shorter film gives the gist of it. http://www.youtube.com/watch?v=Yrn7nxnzqvU Or research the topic yourselves because there is a lot of info out there.

Basically the world as it exists today is owned by the Rothschilds, the Rockefellers, the British Crown, and the Vatican with some lesser titans involved like the Sassoons, the Warbergs, and the Astor Family. They represent the old money of the world. These people ARE the shadowy TPTB. The thing is that old world order is dying. New Oligarchs are rising in the East and they have decided they don't want to deal with the Rothschild owned banks anymore. The creation of the BRICS bank represents the downfall and overthrow of the Red Shield order.

[SeaGypsy]

Will the neo-gestapo show up if I say 'bummer'? With a

[SeaGypsy]

If this gets up, ASEAN will be pushing for next in line, could be a whole bunch of new trade blocks all over. Geez, you guys whining about $4 gas are gonna have a wake up call!

[SeaGypsy]

War will get a hell of a lot more expensive if this gets up. It's hard to see what the US can really do about a contagion of this kind once it gets going. They clearly can't go to war simultaneously against the BRICS without destroying their own domestic economy and likely the rest of the world's with it. Interesting times for our American friends. Wow.

[eXpat]

Gold and not greenback...
$this->bbcode_second_pass_quote('', 'L')ast week, World Bank President Robert Zoellick endorsed a new bank to be created by the top five emerging economies. The countries include: Brazil, Russia, India, China and South Africa. These five countries account for almost 30 percent of the global economy. The new BRICS bank will almost certainly rival the western and U.S. dominated IMF and World Bank. However, Zoellick said that not having Russia and China as part of “the World Bank system” would be a “mistake of historic proportions,” according to GoldCore.

One of the biggest developments that is likely to occur with the new BRICS bank is the promotion of the five countries to conduct trade in their own currencies, avoiding the U.S dollar as the global reserve currency. GoldCore explains, “The leaders of BRIC nations and other emerging market nations have adopted the idea of conducting trade between the five nations in their own currencies. Two agreements, signed among the development banks of Brazil, Russia, India, China and South Africa, say that local currency loans will be made available for trade between these countries.”

Trading in local currencies will also allow the BRICS to hedge their foreign exchange reserves against the uncertainties facing the U.S. dollar and euro. Many countries are already hedging by purchasing gold. According to the latest data from the World Gold Council, central banks purchased a net total of 440 tonnes of gold in 2011, compared to only 77 tonnes in the previous year. It was the largest amount of net purchases by central banks since 1964. Russia was a large buyer of gold, adding around 95 tonnes in 2011. Chinese official gold reserves numbers are not easily obtained, but some analysts believe the country purchased almost 500 tonnes of gold last year. In 2009, the People’s Bank of China confirmed that it had nearly doubled its gold reserves since 2004, after secretly purchasing significant amounts of the precious metal. With emerging markets increasing the use of local currencies and gold holdings, it is not outside the realm of possibility that some currencies may have some form of a gold peg or standard.

[SeaGypsy]

So how does the US go to war against the UN?

[radon]

$this->bbcode_second_pass_quote('SeaGypsy', 'S')o how does the US go to war against the UN?

[SeaGypsy]

Them being in this case ALL of your own biggest customers. So you can have your % of every transaction? Nope, this time it's impossible and won't happen. The US Dollar was already toast, now it it burning.

[SeaGypsy]

MSM doesn't seem to be noting this but all major trading currencies have gone jumpy in the Easter Market close and primaries are off a percent or 2 as East Asia goes to sleep first. A few days to sleep on it. Meanwhile Spain grabs all the money media. Anyone with a bit of skin on the market, today might be a good day for a review.Gold has to go crazy next week or 2.

[radon]

http://www.atimes.com/atimes/Global_Economy/ND12Dj03.html

$this->bbcode_second_pass_quote('', 'B')ut it is through over-reaching in relation to financial sanctions where the US may well have made a major strategic error. At the very time when the banking system is in crisis, the last thing the US should be doing is forcing a major oil producer like Iran to make alternative arrangements.

A secure messaging system - which is all that SWIFT actually comprises - is actually pretty trivial to replicate, and all it needs is participants, which may or may not be banks, that are looking to clear and settle obligations.

When the BRICS nations met late last month in New Delhi, at the top of their agenda was a BRICS bank. There is no reason at all why such a credit institution need pay heed to US sanctions in respect of Iran because, quite simply, the US needs the BRICS more than the BRICS need the US. In fact, there's no reason why it needs to be a bank at all, as opposed to a BRICS credit clearing network or clearing union.

I suspect we are now entering a period of consequences ... unforeseen consequences.