The Duran Podcast - BRICS Kazan, New Payment System

Episode Date: October 10, 2024

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 in putting together a payment system. This is going to be, from what I understand, this is going to 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 Bricks is putting together?

Well, the first thing to say is that, of course, the Russians are chairing Bricks. So, I mean, they are going to be the host country in Kazan, which is, of course, a city inside the Russian Federation. They are coordinating, therefore, with all the various other BRIC states. And they are the people who will present the proposal, though I suspect it will be a proposal in which the other BRIC states, the other key. 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 defence and security and foreign policy issues. It's also, it's basically the main decision-making boss. 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 Elvira Nubulinna, 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 shableness. 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, yeah, sorry, 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 Nebula 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 Brick's 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. 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 would probably be from central bank to central bank, but then eventually over the years it'll get to a bank to bank level. How does this affect the USD, the US dollar? What's the West going to say? What's the US going to say to all of this?

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, you know, 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 USDA. So we're not going to see a dramatic collapse of the USDA. But this payment system that the Russians and the BRIC 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 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 start 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, what 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 USDA. 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. I wonder if they ever, if they ever thought about the effects of all of this, even reaching to the USDA when they

launched Project Ukraine. No, I don't think they did. I was reading, you know, I think it was foreign policy or foreign affairs or somewhere or other, a long, long article written by Tony Blinken, the Secretary of State, in which he's talking about, you know, the enormous challenges that the United States is facing and has 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 the US Treasury. But even their habits have developed over decades, I don't think they believe deep down that the dollar can ever really be challenged. that the U.S. They assume that the Bretton Wood 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 thought the same about pound sterling and its connection to gold. they also assumed that, you know, 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 difficult.

It 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 the decades to start to think beyond it. And to some extent, as I said, I mean, even as late as the 1970s, this sort of lingering belief that you can't imagine that things are really going to change. In Britain, it's 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. I think they take them very seriously, which is, I think, a big mistake. Yeah, huge mistake. All right, we will end the video there, the durand.com.

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