De-Dollarization Just Accelerated... And You Might Not Even Know About It

BRICS in Nizhny Novgorod, Crickets' Silence, Saudi Arabia, and Bridges (Away from the U.S. Dollar)

This past week has been a real turning point in the de-dollarization trend we’ve been talking about in these pages.

Funny enough, the media seems to be completely oblivious to most of it. Perhaps intentionally so.

As I told you earlier this week, the 50-year petrodollar agreement between Saudi Arabia and the United States is no more, with no new deal in place.

But, we mostly heard crickets from the Western mainstream media…

And just as I was writing about that, something else closely related was happening in Russia. This is from TASS, the Russian News Agency...

NIZHNY NOVGOROD, June 10. /TASS/. Delegates from 22 countries are expected to take part in the meeting of the BRICS foreign ministers in Nizhny Novgorod, the organizers told journalists.

According to the organizers, representatives from Russia, Brazil, China, Egypt, Ethiopia, India, Iran, South Africa, and the United Arab Emirates (UAE) are taking part in sessions on Monday and representatives from Bangladesh, Bahrain, Belarus, Cuba, Kazakhstan, Laos, Mauritania, Saudi Arabia, Sri Lanka, Thailand, Turkey, Venezuela, and Vietnam are expected to attend events on Tuesday, June 11.

The majority of the participating countries are represented by ministers.

Meanwhile, once again, awkward silence from the Western media. Here's a screenshot I've taken of my Google results to illustrate. Not even one of these reports came from the West...

This is suspiciously odd given that….

• BRICS collectively hold 32% of the world's GDP, surpassing the 30% held by the G7 countries.

• BRICS represent nearly half of the world's population.

• BRICS nations produce about 42% of global crude oil output.

Needless to say, it’s fair to say that BRICS isn’t just any bunch of countries. This makes it doubly weird how the mainstream media chose to ignore this.

The Bridges Away from the Dollar

If you're wondering why all these countries were meeting in Nizhny Novgorod, it's because 2024 is the year Russia is chairing the BRICS bloc.

As you well know, the Russian bear isn't too pleased with how it's been treated over the Ukraine war, with the collective West slapping it with sanctions and ganging up on its sovereign funds.

So, I wasn't too surprised to see the de-dollarization theme take center stage at the meeting, with BRICS ministers discussing "enhanced use of local currencies in trade and financial transactions between the BRICS countries."

Now, it’s worth pointing out that Russia isn’t starting from scratch here…

In January, for instance, the head of the Russian central bank, Elvira Nabiullina, noted that the share of Russia’s transactions in national currencies with fellow BRICS countries had increased to 85%. That’s up from 26% two years ago.

Russia has also taken the lead in developing the BRICS Bridge, a platform designed to facilitate cross-border payments among BRICS countries using their national currencies.

Since February, it's been a work in progress, so it's still too early to say if it will be a success. But that's not the main point; the main point is that it's just one of many initiatives the BRICS countries are exploring right now.

Take Saudi Arabia again…

The country is the largest crude oil exporter on the planet and, as I wrote to you this week, it has decided to stop selling its oil exclusively in U.S. dollars. So, you can bet that the oil-rich kingdom was at this week’s BRICS meeting in Russia (making its first official appearance since joining BRICS earlier this year). But it wasn’t before it had joined mBridge just days earlier.

Now, this is a major development…

That’s because mBridge is a massive cross-border central bank digital currency (CBDC) project led by the Bank for International Settlements (BIS)… which is likely why the media couldn't fully ignore it.

Based in Basel, Switzerland, and often called "the bank of central banks," BIS facilitates transactions — especially gold transactions — among the world's major central banks. And since 2021, it's been working with the central banks of Hong Kong, the UAE, China, and Thailand to develop a digital currency for trade settlements. So, that’s mBridge...

That’s right, your eyes are not deceiving you… Thailand is the only country on this list that isn’t part of BRICS (with Hong Kong being a territory of the People's Republic of China), and even that country has already applied for membership as well.

Unsurprisingly, it was China’s Digital Currency Research Institute (DCRI) that developed the blockchain technology upon which mBridge is built.

Suffice it to say, BRICS are pushing for de-dollarization in international transactions on multiple fronts right now. Some of these initiatives may not pan out, but others probably will.

And because of that, it's just a matter of time before payments for crude oil, gas, and other natural resources between the other members of bloc won't be made in dollars.

Does this mean Saudi Arabia will suddenly stop taking dollars for its oil? No, of course not. But since the strength of the U.S. government relies on global crude oil trade primarily using the greenback, this will hit it hard.

Regards,

Lau Vegys