The Duran Podcast
BRICS Kazan, New Payment System
- All right, Alexander, let's talk about the BRICS Summit, which is a couple of weeks away from Kazan, which will be taking place from Kazan, Russia, and a lot of talk about a payment system. I think this is the big topic that BRICS is going to undertake in their event. And it looks like Russia is taking the lead and putting together a payment system. - This is going to be, from what I said, it's gonna be a payment system on a government-to-government level. We're not talking about anything that's going to interact with the actual consumer or customer. But we are looking at perhaps a digital system, digital currency or a basket of currencies. What have you heard about the payment systems that BRICS is putting together? - Well, the first thing to say is that, of course, the Russians are chairing BRICS. So, I mean, they are going to be the host country in Kazan, which is, of course, the city inside the Russian Federation. They are coordinating, therefore, with all the other various other BRICS states. And they are the people who will present the proposal, though I suspect it will be a proposal in which the other BRICS states, the other key BRICS states, which for this purpose will be India, China, South Africa, obviously, Brazil, but also Saudi Arabia and Iran, will also be participating and involved in. And I think it's absolutely clear now that the priority is going to be to set up this payment system, this international payment system. And we've had the strongest indication of this up to this point, because a couple of days ago, Russia held a meeting of its Security Council, and I've discussed many times that the Russian Security Council doesn't just deal with defense and security and foreign policy issues. It also is basically the main decision-making body on all questions in Russia. Anyway, they held a meeting, and we know, because Putin has told us, that the topic of discussion at that meeting was the setting up of this international payment system. That this is an entire Security Council meeting was devoted to this particular discussion. And the list of people who attended that meeting revealed who the person is, who is tasked with setting it up. And unsurprisingly, it turned out to be Alvera Nabulina, who is obviously the chair of the Russian Central Bank. She is not a member of the Security Council, so she was clearly invited to attend the Security Council. And she was asked to provide a report, which we have not been shown. We don't know what she said, but she provided a report setting up the progress that is being made in setting up this Security Council, this international payment system. Now, judging from Putin's words, and we only have an excerpt of his introductory words, the words where he basically introduced Nabulina to the meeting and set out the broad framework of what the discussion would be. There are still issues to sort out, but significant progress has been made, and it looks as if in Kazan some kind of plan for the setting up of a payment system will be set out. We'll probably have the overall outlines, even if it will probably still be some months, maybe a year before the system itself goes into operation. And I agree with you, by the way, I think that it will be a system principally based around Greeks central banks. In other words, what will happen is that the central banks will transfer money between each other rather than have individual banks in various countries do that. So let's say, for example, a Russian company wanted to sell oil to India. The Indian company that bought the oil would pay an Indian, would put the money in an Indian bank. The Indian bank would transfer the funds to the Indian central bank, the Reserve Bank of India. The Reserve Bank of India would then arrange some kind of transfer mechanism to the central bank of Russia, which would then transfer the funds to the Russian oil supplier. So that, I think, initially at least, it would be done through the central banks. And my own guess is that this is going to be built around digital payment systems. - Yeah, eventually it'll get to the bank level as well. The initial plan will probably be from central bank to central bank, but then eventually over the years it'll get to a bank-to-bank level. - So how does this affect the USD, the US dollar? - Well, what's the West Point to say? What's the US going to say? - The West isn't going to like this at all. Now, because of this, the way this is being unveiled, I think you will probably find that for smaller transactions, for tourists traveling around or people, individual businessmen who want to transfer money from one place to another, they will still use the Western systems. Swift and the USD. So we're not going to see a dramatic collapse of the USD, but this payment system that the Russians and the Greek states are going to work to set up, I think in time it is going to affect the USD. And the main thing is that we're talking about a bulk, big transfers of funds covering large payments. So transfers of oil, transfers of grain, transfers of large stocks of machine tools and that kind of thing. And where trade starts, then we start to see eventually as the system beds in and works its way through, it will develop exactly, as you said, we'll start to get actual messaging systems started to appear. A payment system is not the same as a messaging system. Swift is a messaging system. I think that's an important distinction to make. You don't transfer money by a Swift. What central banks do is that they send messages between each other. So we will eventually see messaging systems begin to appear and other systems begin to appear also. And then the architecture will develop and evolve further and then at some point within the next couple of years and we're probably only talking about a couple of years, then you will start to see a significant effect on the position of the USD. This is the first most difficult, decisive step, if you like, in that direction. - The Biden White House really messed it up with this one. - Yeah. - I wonder if they ever thought about the effects of all of this, even reaching to the USD when they launched Project Ukraine. - No, I don't think they did. I was reading, and I think it was foreign policy or foreign affairs or somewhere rather, a long, long article written by Tony Blinken, the secretary of state in which you're talking about the enormous challenges that the United States is facing and how it's up against the revisionist powers, supposedly China and Russia and all that and how it's defending freedom and democracy and all this. And he didn't seem to be aware at all of this huge change starting to happen. I don't think it registers with him. I don't think it registers with lots of people in the United States. I think there's some people who will understand it in the Federal Reserve Board, probably in the US Treasury. But even there, habits have developed over decades. I don't think they believed it down, that the dollar can ever really be challenged, that they assume that the Bretton Woods system is going to be there forever because it's been there for as long as any of them can remember. And I think that's a complacent for you myself. I mean, in the 1920s, people in London bought the same about pound sterling and its connection to gold. They also assumed that it would be there forever. It had been in existence, pound sterling based on gold had been basically stable since the 17th century. The assumption that it would remain that way forever was very, you know, hard what people were hardwired to think that. And when, of course, it all fell apart, they were all bewildered and it took them decades to start to think beyond it. And to some extent, as I said, I mean, even as late as the 1970s, this lingering belief that you can't imagine that things are really going to change in Britain, but still there. And I think the same is going to be true in the United States. I mean, they're aware of what's going on in Kazan. They know that this meeting is going to take place. They probably have some idea of the kind of plans that are being discussed. But I don't think they take them very seriously, which is, I think, a big mistake. - Yeah, huge mistake. - All right, we will end the video there. Thederan.locals.com. We are on Rumbelade, see if it's your Telegram, Rockfin, and Twitter X and go to the Duran shop, pick up some merch like what we are wearing in this video. The link to the shop is in the description box down below, take care. (upbeat music) (upbeat music) (upbeat music) (upbeat music) (upbeat music) (gentle music)