Archive for the BRICS Category

USA + FRN/PD – – > IMF + SDR – – > NDB + UMU? The “Universal Monetary Unit” . . . Coming To a Planet Near You (January 2, 2017)

Posted in AIIB, Banks and Banking System, Book Reference, BRICS, CFETS, CIPS, Dollar - World's Reserve Currency, Gold, Gold Standard, Hyperdive Economic Collapse, International Finance, International Monetary Fund, Money, Petrodollar, SDR - Special Drawing Rights, Special Drawing Rights (SDR), Trade, Universal Monetary Unit, World's Reserve Currency on January 2, 2017 by e-commentary.org

. . .

K          “Remember way back on October 1 when the International Monetary Fund (IMF) implemented the modified composition of the Special Drawing Rights (SDR) that includes for the first time the Chinese Renminbi (RMB) along with the United States Dollar (FRN/PD), the Euro (€), the British Pound Sterling (£) and the Japanese Yen (¥) in the Great Valuation Basket?”

J          “Couldn’t forget.  To celebrate the transition, we got the entire day off.”

K          “The Federal Reserve Note/PetroDollar maintained its percentage share of the portfolio with the Euro, Pound and Yen yielding room for the new kid on the block.  The way I see it, the evolution of the SDR may be too slow for Brazil, Russia, India, China and South Africa (the BRICS countries) and other countries (the BRICS+ countries) and still leaves the FRN/PD as the world’s reserve currency.”

J          “They say more countries are getting cranky that the FRN/PD remains the mandatory currency peg for trade on the global market.  Last Thursday, the China Foreign Exchange Trade System (CFETS), the foreign exchange trading platform operator, announced that it is adjusting the way it calculates the CFETS Yuan Index which is a critical measure of the Yuan against a basket of currencies, starting yesterday.”

K          “And you got the entire day off.” 

J          “And today, for good measure.  They say that the USA will not allow the IMF to revisit the composition of the SDRs again for years.  The problem for the BRICS+ countries is that the United States has veto power over the composition of the SDR and will block any attempt to accelerate the transition to incorporate other currencies.”

K          “Think about this possible scenario.  The BRICS+ countries may make an end run and expand the mandate and activities of what is now known as the New Development Bank (NDB) and create a Universal Monetary Unit (UMU) constituted of the Chinese RMB, Russian Ruble, Indian Rupee, South African Rand, Brazilian Real, good old gold (Alpha uniform) and a smorgasbord of other currencies.”     

J          “While they are at it, the South African Kruggerand could supplant the Rand and serve as the gold component or part of the gold component.”

K          “Who knows, when they do that, you may get the week off of work.”

J          “Count me in and count me off.  And to provide for a smoother transition, include in the new generation UMU the current currencies in the SDR in diluted amounts.  A measured and gradual approach is prudent.  Interdependent economies and unintended consequences, you know.”

K          “While they are at it, they could go full in.  The Cross-Border Inter-Bank Payment System sometimes known as the China Interbank Payment System (CIPS) could develop into a comparable transnational multilateral payment system as a complement to and to compete with the Society for Worldwide Interbank Financial Telecommunication (SWIFT).”

J          “That’s exactly what I was going to suggest.  An economy needs a ‘thing’ to serve as money/currency/chits/script/wampum and a means to reconcile payments.  The BRICS+ countries have no reason to wait another half decade when they can do it themselves.”

. . .

J          “Or the BRICS+ countries may force the issue at the IMF meeting in Rome, District of Columbia on April 21 – 23.”

K          “And you will get at least two days off of work.”

J          “Can’t forget.  Stay tuned.”

. . .

K          “Someone surely has thought and wondered about these possible developments.”

J          “You think?  I wonder if anyone cares.  What’s on tv?”

. . .

[See the e-commentary at “The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016)” and “Dollar – World’s Reserve Currency”.]

Bumper stickers of the week:

The “Universal Monetary Unit” . . . Coming To a Planet Near You

Paper [Money] Is Patriotic

Fight the War on Cash