- Sep 12, 2009
- 6,840
- 3,594
by Horace G. Campbell
Over 65 percent of the world’s nations keep their foreign exchange reserves in the US dollar, the
dominant world currency. The creation of the BRICS Bank and other financial interventions will
likely weaken the dollar’s dominance and contribute to the creation a new international economic
order.
This article previously appeared in Pambazuka News.
“This summit represented a major step in breaking the Exorbitant Privilege of the
US dollar as a the dominant international currency.”
At the end of the Sixth BRICS Summit in Fortaleza, Brazil on July 16, 2014, the leaders of the
BRICS countries announced the “Fortaleza Action Plan.” This plan is in the context of the Fortaleza
Declaration, where the leaders reinforced their position that BRICS would be an international force
in challenging the neo-liberal policies of the Washington Consensus. Touching on areas of major
destabilization in the world – from Syria to Sudan and from Ukraine to Iraq – the leaders spelt out
the need for new paths to peace and for strengthening the United Nations to resolve the outstanding
questions of war and insecurity. The most daring aspect of the Fortaleza Declaration was the
announcement of a new financial architecture to intervene in relation to the international tensions
that have arisen since the Federal Reserve Bank of the United States announced the monetary
policy of Quantitative Easing This policy allows a central bank, like the Federal Reserve System, to
purchase government or other securities from the market with the goal of lowering interest rates
and increasing the available money supply. The BRICS summit announced two new pillars in a new
financial architecture that is to be anchored with the headquarters of the New Development Bank in
Shanghai, China.
The Fortaleza Action Plan and the outcomes of this summit represented a major step in breaking
the Exorbitant Privilege of the US dollar as a the dominant international currency. Along with the
formal establishment of the New Development Bank (NDB), the leaders announced the launch of a
Contingency Reserve Arrangement (CRA), which in 2013 was approved to receive a $100 billion
fund to combat currency crises. The first president of the Bank will be from India, the inaugural
Chairman of the Board of directors will come from Brazil and the inaugural chairman of the Board
of Governors will be Russian. It was stressed in the Fortaleza proclamations that the BRICS Bank
would be organized on the basis of equality unlike the current IMF and World Bank where the
leader of the IMF is always a European and the head of the World Bank is always a U.S citizen. The
proposal for the BRICS bank had been announced at the BRICS summit in New Delhi in 2012 and
at the summit in Durban in 2013 the plan for the CRA was also outlined. The long term goal of the
CRA will be to provide emergency cash to BRICS countries faced with short term credit crisis or
balance of payments problems. Ultimately, in the context of the present currency wars, the CRA will
replace the International Monetary Fund (IMF) as the provider of resources for BRICS members
and other poor societies when there is balance of payment difficulties.
Read more: http://blackagendareport.com/content/brics-bank-challenges-exorbitant-privilege-us-dollar
Over 65 percent of the world’s nations keep their foreign exchange reserves in the US dollar, the
dominant world currency. The creation of the BRICS Bank and other financial interventions will
likely weaken the dollar’s dominance and contribute to the creation a new international economic
order.
This article previously appeared in Pambazuka News.
“This summit represented a major step in breaking the Exorbitant Privilege of the
US dollar as a the dominant international currency.”
At the end of the Sixth BRICS Summit in Fortaleza, Brazil on July 16, 2014, the leaders of the
BRICS countries announced the “Fortaleza Action Plan.” This plan is in the context of the Fortaleza
Declaration, where the leaders reinforced their position that BRICS would be an international force
in challenging the neo-liberal policies of the Washington Consensus. Touching on areas of major
destabilization in the world – from Syria to Sudan and from Ukraine to Iraq – the leaders spelt out
the need for new paths to peace and for strengthening the United Nations to resolve the outstanding
questions of war and insecurity. The most daring aspect of the Fortaleza Declaration was the
announcement of a new financial architecture to intervene in relation to the international tensions
that have arisen since the Federal Reserve Bank of the United States announced the monetary
policy of Quantitative Easing This policy allows a central bank, like the Federal Reserve System, to
purchase government or other securities from the market with the goal of lowering interest rates
and increasing the available money supply. The BRICS summit announced two new pillars in a new
financial architecture that is to be anchored with the headquarters of the New Development Bank in
Shanghai, China.
The Fortaleza Action Plan and the outcomes of this summit represented a major step in breaking
the Exorbitant Privilege of the US dollar as a the dominant international currency. Along with the
formal establishment of the New Development Bank (NDB), the leaders announced the launch of a
Contingency Reserve Arrangement (CRA), which in 2013 was approved to receive a $100 billion
fund to combat currency crises. The first president of the Bank will be from India, the inaugural
Chairman of the Board of directors will come from Brazil and the inaugural chairman of the Board
of Governors will be Russian. It was stressed in the Fortaleza proclamations that the BRICS Bank
would be organized on the basis of equality unlike the current IMF and World Bank where the
leader of the IMF is always a European and the head of the World Bank is always a U.S citizen. The
proposal for the BRICS bank had been announced at the BRICS summit in New Delhi in 2012 and
at the summit in Durban in 2013 the plan for the CRA was also outlined. The long term goal of the
CRA will be to provide emergency cash to BRICS countries faced with short term credit crisis or
balance of payments problems. Ultimately, in the context of the present currency wars, the CRA will
replace the International Monetary Fund (IMF) as the provider of resources for BRICS members
and other poor societies when there is balance of payment difficulties.
Read more: http://blackagendareport.com/content/brics-bank-challenges-exorbitant-privilege-us-dollar