Money Flow Trading Method along with Risk Management

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https://ecp.yusercontent.com/mail?ur...5ZAFq_f05g--~D

11:35 AM ET Sunday, August 24, 2025

Dear Friend of GATA and Gold:
GATA long has been reading the daily market letter from our old friend Michael J. Ballanger in Canada, a letter that concentrates on the mining industry but often has a wider focus and, unlike most financial letters, acknowledges market manipulation. Your secretary/treasurer thinks it's a great letter, and as you'll see below, Ballanger is now taking new subscribers again and is offering a substantial subscription fee discount to GATA supporters.
I think you'll enjoy it and find it profitable.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Sunday, August 24, 2025
Dear GATA Family:
I started my career as a commentator on the precious metals markets shortly after I befriended GATA founders Bill Murphy and Chris Powell in 2007. I have stayed in touch with them over the past 18 years, and we remain great friends. I think they should be inducted into the Canadian Mining Hall of Fame for their work showcasing the criminal workings of the bullion banks and their linkage to the central banking cartel.

I am re-opening my service -- the GGM Advisory -- to new subscribers after a two-year hiatus and am welcoming all members of the GATA family to subscribe.
The annual fee of US$499 will be discounted for GATA supporters to US$299.

In a nutshell, the GGM Advisory service is me. Its email alerts come every morning and are filled with actionable ideas, albeit sometimes included with ramblings about my dog or deliverymen incapable of speaking English, but always relevant.

A recent letter can be viewed at GATA's website here:
https://www.gata.org/sites/default/f...08-20-2025.pdf

If you have an interest, please email me at:
[email protected]
Warmest regards,
Michael J. Ballanger

* * *

Support GATA by purchasing
Stuart Englert's "Rigged"
"Rigged" is a concise explanation of the government's currency market rigging policy and extensively credits GATA's work exposing it. Ten percent of sales proceeds are contributed to GATA. Buy a copy for $14.99 through Amazon:
https://www.amazon.com/Rigged-Exposi...8&sr=8-2-fkmr1

* * *

Help keep GATA going:
GATA is a civil rights and educational organization based in the United States and is tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
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1 GGM Advisory EMAIL ALERT: 2025-146-GTCH DATE: Wednesday, August 20, 2025, 1:03 p.m.

TOPIC: Getchell Gold Corp. new 52-week high The shares of top-ranked Getchell Gold Corp. (GTCH: CSE/GGLDF: US) have finally broken out to a new 52-week high at $.385 on volume of 361,329, a wonderful testimonial to the great faith placed in the management group (and to a far lesser degree, yours truly) and a deserving reward for the subscribers that rescued Fondaway Canyon back in late 2023 and 2024.

Those subscribers recently received their entire principal from that debenture issue returned to them along with full accrued interest, leaving them with 100,000 warrants for every $10,000 invested and exercisable at $.10 until various dates in 2026. For those who converted the debenture to the $.20 unit offering back in June (93.7% did), the principal amount of that debenture is now up 90%. Stated another way, if you invested $100,000 into the debenture, you got all your money back plus interest, which was then converted to 500,000 units at $.20 plus the 1,000,000 $.10 warrants that are now up $280,000. At $.38 per share, the value of the $100,000 debenture has grown as follows: ➢ $100,000 debenture receives .1518% accrued interest ➢ $15,180 added to principal ➢ $115,180 – converted to units at $.20 = 575,900 units ➢ 575,900 units = 575,900 shares plus 287,950 warrants exercisable @ $.30 for two years If sold today, the original $100,000 debenture is worth ➢ 575,900 X’s $.38 = $218,842 (shares portion) ➢ 287,950 warrants X’s $.08 = $23,036 ($.30 warrant portion) 2 GGM Advisory EMAIL ALERT Plus: ➢ 1,000,000 $.10 warrants X’s $.28 = $280,000 ➢ Total proceeds: $218,942 + $23,036 + $280,000 = $544,914. ➢ Less original investment $100,000 = $444,914 profit ➢ 444.914% profit since December 27th ,2024.

As it turns out, Getchell Gold Corp. was put on the Recommended list of Jeff Clark ( https://thegoldadvisor.com/ ) a widely respected newsletter writer and gold stock expert. A recent interview with Adam Taggert can be watched here. For those subscribers that added through the recent $.20 private placement that saw Myrmikan Capital’s Dan Oliver invest CAD $1.2 million as lead order, it has been a prudent move, up 90% since the July 16th closing date. I have not been writing a great deal lately about Getchell largely because of the market’s inability to recognize what many of us thought was a “no-brainer” after the PEA came out earlier this year.

I have analyzed GTCH/GGLDF literally “to death” since first recommended in 2020, and quite frankly became thoroughly exasperated when the results of the PEA failed to move the needle in even the slightest of distances. However, we all hung in there and now the limited risk that became evident to me back in 2022 when the North Fork and Colorado SW zones were discovered has finally been recognized (and appreciated) by the likes of Dan Oliver and now Jeff Clark, as new waves of high net worth investors are going to be hearing the GTCH/GGLDF story with gold threatening to break above the $3,530 all-time high.

My target price remains USD $75 per ounce of in situ metal value, which for GTCH/GGLDF is 2,317,000 ounces times $75 or USD $173,775,000. The current market cap of GTCH/GGLDF is USD $73,796,400, so at $75 per ounce, the shares have a target price of USD $.64 or CAD $.89 which amounts to a gain of 135% on invested capital. Of course, for those who participated in the debenture offering and/or the recent CAD $.20 unit offering, the returns will be strikingly higher if the target price is achieved. As a last note,

I reserve the right to change my target price higher based on the success (or lack thereof) of the 2025 drill program currently underway. Because Fondaway Canyon is wide open in all directions and to depth, I eagerly await the results and sincerely hope that some deeper holes are drilled to determine just how big it might be. At the bottom of FCG22-17 in the North Fork Zone, it yielded 3.88 grams over 85.9 metres, which is $454/tonne ore over a significant width while being stopped in ore.

That bodes well for the 2025 drill program. 3 GGM Advisory EMAIL ALERT GGMA housekeeping: I remained stalwart since just after the closing of the GTCH/GGLDF debenture offering that I would not issue any subscription renewal offers until the share price was able to get through CAD $.35. If it closes above that level this afternoon, I will be true to my word and issue renewal notices through PayPal in the amount of USD $499 which covers the Weekly Missive, Special Situations Bulletins, and the more frequent GGMA Email Alerts. If you wish to renew through email transfers (Canadian subscribers only), that will be fine and for those non-Canadian subscribers who cannot use PayPal, a cheque payable to “Bonaventure Explorations Limited” is acceptable. (Do not worry about certifying it.) And I thank you all in advance…

MJB Disclaimer: This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making, but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore, they are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading, and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

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https://www.zerohedge.com/markets/ce...trol-inflation

Central Banks Do Not Prevent Financial Crises Or Control Inflation

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by Tyler Durden

Sunday, August 24, 2025 - 11:40 AM
Authored by Daniel Lacalle via Mises.org,

Easing and tightening decisions move all assets from bonds to private equity. Their role is supposed to be to control inflation, provide price stability, and ensure normal market functions. However, there is little evidence of any success in achieving their goals. The era of central bank dominance has been characterised by boom-and-bust cycles, financial crises, policy incentives to increase government spending and debt, and persistent inflation. Recently developed economies’ central banks have taken an increasingly interventionist role.


https://assets.zerohedge.com/s3fs-pu...?itok=xmtSo8To


The creation and proliferation of central banks over the past century promised greater financial stability. Nevertheless, as history and current events continually show, central banks have not prevented financial crises. The frequency and severity of these crises have fluctuated but have not declined since central banks became the leading figure in financial market regulation and monetary interventions. Instead, central banking has introduced new fragilities and changed the nature, but not the recurrence, of financial turmoil.

Empirical evidence dispels the myth that central banks ended the era of frequent financial crises. Regardless of central bank oversight, a credit boom preceded one in three banking crises. Who created those credit booms? Central banks, through the manipulation of interest rates. According to Laeven and Valencia’s comprehensive database, there were 147 banking crises between 1970 and 2011 alone, in an era of near-universal central bank dominance. Financial crises remain a persistent global phenomenon, occurring in cycles that coincide with episodes of credit expansion. Central banks have often prolonged boom periods with low rates and elevated asset purchases and created abrupt bust moments after making mistakes about inflation and credit risks.

According to Reinhart and Rogoff’s work, the rate of crises has not dramatically changed with central banking. Instead, the forms of crises evolved. Twin crises (banking and currency) remain common, and the severity, measured in output loss or fiscal costs, has often increased, especially as financial institutions and governments grew intertwined with monetary authorities.

The Great Financial Crisis of 2008, the Eurozone sovereign debt crisis, and the 2021–2022 inflationary burst rank among the events with the highest costs in history, contradicting the view that central banks have neutralised the risk or costliness of crises.

Central banks act as “lenders of last resort” and regulators. However, with each subsequent crisis, the solution is always the same: larger and more aggressive asset purchase programmes and negative real rates. This means that central banks have gradually moved from lenders of last resort to lenders of first resort, a role that has amplified vulnerabilities. Due to the globalisation of modern central banking and financial innovations, crises tend to be larger in scale and more complex, impacting most nations. The profound involvement of central banks in markets means their policies, such as emergency liquidity or asset purchases, mask systemic risks, leading to delayed but more dramatic failures.

In many advanced economies, recent waves of crises were triggered by debt accumulation and market distortions engineered by central banks, often under the guise of maintaining stability. The IMF and World Bank both note that about half of debt accumulation episodes in emerging markets since 1970 involved financial crises, and episodes associated with crises are marked by higher debt growth, weaker economic outcomes, and depleted reserves—regardless of central banking.

Major crises in recent decades have highlighted that central banks do not prevent systemic disruption. Often, their interventions have only delayed the reckoning but made underlying imbalances, particularly government debt, worse. Central banks do not prevent financial crises. They reshape them, often making their consequences more far-reaching, while shifting the costs onto the public through inflation and debt monetisation.

The Growing Priority: Supporting Government Over Managing Inflation
As I argued recently, central banks are increasingly prioritising government debt distribution over combating inflation. Central banks have one priority: keeping the government debt bubble alive. Central banks constantly inject liquidity to stabilise sovereign issuers rather than uphold price stability. In 2025 alone, global debt maturities will reach nearly $2.78 trillion, and central banks are expected to continue easing monetary policies, even as inflation proves persistent.

Central banks use their enormous power to disguise the insolvency of sovereign issuers and make their debt pricier, which leads to the subsequent excessive risk-taking and asset price inflation. Furthermore, the idea that low rates and asset purchases are tools that help governments reduce their fiscal imbalances and conduct budget prudence is negated by reality. Artificially low rates and asset purchases justify persistent deficits and high debt.

Central banks are enabling inflation and financial instability when they should be restraining it. By ignoring monetary aggregates and the risks created by rising government intervention in the economy and currency issuance through debt instruments, central banks are enabling the slow-motion nationalisation of the
economy.

The misguided central bank monetary expansion and negative rate policy of 2020, perpetuated well into 2022 despite soaring inflation, is a clear example.

Governments benefited in the period of expansion with enormous debt purchases that enabled an ill-advised increase in government spending and debt. Meanwhile, citizens and small businesses suffered from high inflation. Thus, when central banks finally acknowledged the inflation problem they helped create, they kept loose policies prioritising liquidity, which fuelled more government irresponsibility, and the rate hike damaged the finances of families and small businesses that previously suffered the inflation burst. Governments weren’t concerned about rate hikes because they increased taxes.

The Federal Reserve’s response to increasing government deficits has consistently favoured greater government intervention and rising debt levels, even at the
expense of higher inflation, which has undermined its independence and credibility.

Independence vanished when central banks abandoned or ignored price stability, blaming inflation on various absurdities instead of government spending and money supply growth.

The Bank of England, for example, keeps cutting rates and easing policy with rising inflation.
Central banks tend to ease monetary policy when governments increase spending and taxes. However, policymakers claim to be data-dependent and strict when governments reduce taxes and spending. Why? Central banks have transitioned from being independent monetary authorities safeguarding the currency’s purchasing power and controlling inflation to facilitating the distribution of rising government debt and disguising rising issuer insolvency.

Modern central banking has shown that no single authority should set interest rates and liquidity. They have consistently erred on the side of rising government size in the economy and made erroneous estimates of inflation and job growth. The reason for this is straightforward: as the size of government in the economy and sovereign debt, which is often considered the safest asset, increase, the central bank’s role becomes increasingly important for maintaining market stability.

Many central banks state that they don’t interfere with fiscal policy and remain independent… except when someone dares to cut taxes and political spending. As such, central banks are not a limit to risk-taking, rising government spending and budget irresponsibility, but rather a tool that enables market and government interference.

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WARNING !!!

https://www.theepochtimes.com/tech/g...aF4Lw4%2FVjHBd

Artificial Intelligence

‘Godfather of AI’ Warns Superintelligent Machines Could Replace Humanity
Geoffrey Hinton, the Nobel Prize-winning computer scientist who pioneered neural networks, says artificial intelligence is advancing too fast to control.

https://www.theepochtimes.com/_next/...pg&w=1200&q=75
Nobel laureate Geoffrey Hinton delivers his lecture at Stockholm University in Stockholm, Dec. 8, 2024. Pontus Lundahl/TT News Agency/AFP via Getty Images

https://www.theepochtimes.com/_next/...jpg&w=256&q=75Tom Ozimek
Reporter
8/23/2025|Updated: 8/24/2025

Geoffrey Hinton, the pioneering computer scientist called the “Godfather of AI,” has once again sounded the alarm that the very technology he helped bring to life could spell the end of humanity as we know it.

In an interview clip released Aug. 18 as part of the forthcoming film “Making God,” Hinton delivered one of his starkest warnings yet. He said that humanity risks being sidelined—and eventually replaced—by machines far smarter than ourselves.

“Most people aren’t able to comprehend the idea of things more intelligent than us,” Hinton, a Nobel Prize winner for physics and a former Google executive, said in the clip.

“They always think, ‘Well, how are we going to use this thing?’ They don’t think, ‘Well, how’s it going to use us?’”
Hinton said he is “fairly confident” artificial intelligence will drive massive unemployment, pointing to early examples of tech giants such as Microsoft replacing junior programmers with AI. But the larger danger, he said, goes far beyond the workplace.

“The risk I’ve been warning about the most … is the risk that we’ll develop an AI that’s much smarter than us, and it will just take over,” Hinton said.
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https://www.theepochtimes.com/_next/...pg&w=1200&q=75

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https://www.theepochtimes.com/_next/...pg&w=1200&q=75
“It won’t need us anymore.”

The only silver lining, he joked, is that “it won’t eat us, because it’ll be made of silicon.”

From Breakthroughs to Regrets
Hinton, 77, has spent decades pioneering deep learning, the neural network architecture that underpins today’s artificial intelligence systems. His breakthroughs in the 1980s—particularly the invention of the Boltzmann machine, which could learn to recognize patterns in data—helped open the door to image recognition and modern machine learning.

That work earned him the 2024 Nobel Prize in Physics, awarded “for foundational discoveries and inventions that enable machine learning with artificial neural networks.”

The Royal Swedish Academy of Sciences noted how Hinton’s early use of statistical physics provided the conceptual leap that made today’s AI revolution possible.
But Hinton has since emerged as one of the field’s fiercest critics, warning that its rapid development has outpaced society’s ability to keep it safe. In 2023, he resigned from his role at Google so he could speak freely about the risks without implicating the company.

In his Nobel lecture, Hinton acknowledged the potential benefits of AI—such as productivity gains and new medical treatments that could be a “wonderful advance for all humanity.” Yet he also warned that creating digital beings more intelligent than humans poses an “existential threat.”
“I wish I’d thought about safety issues too,” he said during the recent Ai4 conference in Las Vegas, reflecting on his career. He added that he now regrets solely focusing on making AI work, rather than anticipating its risks.

Teaching AI to Care
Hinton has previously estimated there is a 10 percent to 20 percent chance that AI could wipe out humanity. In a June episode of The Diary of a CEO podcast, he said that the engineers behind today’s AI systems don’t fully understand the technology and broadly fall into two camps: one that believes in a dystopian future where humans are displaced, and the other that dismisses such fears as science fiction.

“I think both of those positions are extreme,” Hinton said.
“I often say 10 percent to 20 percent chance [for AI] to wipe us out. But that’s just gut, based on the idea that we’re still making them and we’re pretty ingenious. And the hope is that if enough smart people do enough research with enough resources, we’ll figure out a way to build them so they’ll never want to harm us.”

At the Las Vegas conference, Hinton offered a novel idea for how to mitigate the danger: Instead of trying to force AI systems into submission, researchers should design them with “maternal instincts” so they would want to protect humans even as they grow smarter.

“The right model is the only model we have of a more intelligent thing being controlled by a less intelligent thing, which is a mother being controlled by her baby,” Hinton said at the conference.

“They’re going to be much smarter than us,” Hinton warned, adding that “the only good outcome” is if they care about humanity the way a mother regards her child.
“If it’s not going to parent me, it’s going to replace me.”

Tom Ozimek
Reporter
Tom Ozimek is a senior reporter for The Epoch Times. He has a broad background in journalism, deposit insurance, marketing and communications, and adult education.

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Mohammed Ali Lskaafi.PhDMohammed Ali Lskaafi.PhD • 2ndVerified • 2ndQuantitative Finance & EconometricsQuantitative Finance & Econometrics2w • 2 weeks ago

• Visible to anyone on or off LinkedIn

The United States attempted to borrow $42 billion through an auction of 10-year bonds. The auction faced partial failure as demand weakened, and even foreign banks withdrew their participation. Foreign central banks, which have traditionally been a reliable source of demand for Treasuries, are stepping back. Institutional investors are also showing caution. This situation has left primary dealers and domestic banks to fill the gap. However, these institutions are not natural buyers; they are intermediaries who are being forced to absorb more supply than usual to prevent the auctions from failing out of necessity.

Activate to view a larger image,

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https://www.ecns.cn/news/politics/20...v8785840.shtml

Politics
The
The
BRICS currency creates a dilemma for the dollar

2025-07-17 16:00:20CHINA DAILYEditor: Zhang Dongfang

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The term "BRICS currency" typically refers to a hypothetical or proposed unified currency for the BRICS grouping. It's not a single, physical currency currently in use, but rather a concept for a potential future monetary system that some suggest will reduce the dominance of the US dollar in international trade and finance.

Is BRICS currency cooperation about immediate de-dollarization or long-term financial sovereignty? The answer is that BRICS cooperation may include reducing long-term dependence on the dollar as a means of exchange. The dollar is involved in more than half of all trade and 80 percent of all foreign exchange transactions.

BRICS currency cooperation aims to gradually reduce the group's dollar dependency, but challenges remain.

The BRICS concept came about not because the dollar is unsuitable as a means of exchange or unit of account, but rather because of the use of the dollar by Washington as a weapon. As I note in my book, Inflated: Money, Debt and the American Dream, the special role of the dollar in US finance allows the US government to impose harsh compliance and reporting requirements on foreign nationals and institutions. The US is an arbitrary hegemon and does not follow reciprocity with other countries.

The global role of the dollar is an anomaly; the byproduct of two world wars had left the other antagonists broken by the time the Bretton Woods Agreement was signed in July 1944.

Choosing the fiat paper dollar as the default global reserve currency more than seven decades ago reflected the fact that the United States was one of the victors and possessed the wealth that gave Washington unchallenged economic leadership. Before World War I, the United Kingdom's pound sterling was the global standard, but importantly, this paper currency was backed by gold — the only money that is not debt. The dollar, too, was backed by gold — until 1933, when the Franklin Roosevelt administration confiscated gold in private hands to prevent his government from collapsing.

Pound notes started to circulate in England in 1694, shortly after the establishment of the Bank of England. The paper pound helped to fuel the expansion of the British Empire, in large part because the only competing form of money was physical gold. When Britain and other nations left the gold standard in the 1930s, it was due to the deflation caused by the Great Depression rather than a deliberate choice.

The 19th-century rule attributed to English journalist and businessman Walter Bagehot says that in times of crisis, lend freely at a high rate against good collateral.

Yet since the currency devaluation and gold seizures of 1933, fiat currencies and below-market interest rates have been the rule. In a global scheme in which the government occupies the prime position, the operative term remains "financial repression", whereby governments control markets and artificially suppress rates of return on debt. For this reason, the dollar is losing its role as a store of value to gold.

The fact that the dollar continues to trade strongly versus other currencies reflects the reality that, as the main means of exchange globally, the dollar cannot be easily replaced. One reason for this continued support for the dollar is that the trade in petroleum and other commodities is so large that it requires an equally large currency to accommodate it. Also, neither the Europeans nor the Japanese, the only two possible alternatives, are willing to risk the external deficits or inflation that the US suffers as the host for the global currency.

What global currency will replace the fiat paper dollar? None. As this article is being written, gold is the second-largest reserve asset for central banks after the dollar. "The initiation in 2002 of the Shanghai Gold Exchange was of great strategic significance, both for gold and the global monetary system," notes veteran gold fund manager Henry Smyth in an interview in The Institutional Risk Analyst. "Now it is completely clear what happened."

Smyth and many other observers see the creation of the SGE in 2002 as the return of gold to the international monetary system. But while gold is growing in importance as a reserve asset for many countries, it does not mean that the role of the dollar as a global means of exchange or unit of account is about to change.

The dollar will remain the dominant asset. And even then, displacing the dollar will require a major change in the international monetary system, a change that is already underway.

The author is the chairman of Whalen Global Advisors LLC in New York and the author of Inflated: Money, Debt and the American Dream, published by Wiley Global (2025).


https://image.cns.com.cn/ecns_editor...hrv8783599.jpg
Xi meets Russian FM in Beijing
https://image.cns.com.cn/ecns_editor...hrv8783572.jpg

1. Xi meets Australian PM in Beijing

https://www.cambridge.org/core/eleme...E9556620AE09B0

Series: Elements in the Economics of Emerging Markets
Can BRICS De-dollarize the Global Financial System?
Published online by Cambridge University Press: 24 February 2022
Zongyuan Zoe Liu and
Mihaela Papa

Summary
Existing scholarship has not systematically examined BRICS (Brazil-Russia-India-China-South Africa) as a rising power de-dollarization coalition, despite the group developing multiple de-dollarization initiatives to reduce currency risk and bypass US sanctions. To fill this gap, this study develops a 'Pathways to De-dollarization' framework and applies it to analyze the institutional and market mechanisms that BRICS countries have created at the BRICS, sub-BRICS, and BRICS Plus levels. This framework identifies the leaders and followers of the BRICS de-dollarization coalition, assesses its robustness, and discerns how BRICS mobilizes other stakeholders.

The authors employ process tracing, content analysis, semi-structured interviews, archival research, and statistical analysis of quantitative market data to analyze BRICS activities during 2009-2021. They find that BRICS' coalitional de-dollarization initiatives have established critical infrastructure for a prospective alternative nondollar global financial system. This title is also available as Open Access on Cambridge Core.

1. Element
2. Figures
3. Metrics
4. Accessibility

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Keywords
global financial governanceBRICSde-dollarizationcurrency poweremerging economies
Information
Type
Element
Information
Series: Elements in the Economics of Emerging Markets
DOI: https://doi.org/10.1017/9781009029544[Opens in a new window]
Online ISBN: 9781009029544
Publisher: Cambridge University Press
Print publication: 24 March 2022
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This content is Open Access and distributed under the terms of the Creative Commons Attribution licence CC-BY-NC-ND 4.0 https://creativecommons.org/cclicenses/
Can BRICS De-dollarize the Global Financial System?

1 Introduction
The US dollar’s supremacy and US global leadership have been increasingly questioned since the 2007–2008 global financial crisis. The fact that this crisis originated in the United States raised concerns about the reliability of US leadership and the rationality of preserving the dollar’s hegemonic position in the global financial system. This crisis also created an opportunity for rising powers to seek greater status and representation in global governance. In 2009, Russian President Reference MedvedevDmitry Medvedev (2009) hosted the first BRIC (Brazil, Russia, India, China) Summit in Yekaterinburg to explore how to “overcome the crisis and establish a fairer international system … and discuss the parameters for a new financial system.” Since South Africa joined BRIC in 2010, transforming BRIC into BRICS, the five members have achieved policy coordination in over seventy issue areas (Reference Kirton and LarionovaKirton and Larionova, 2018; Brazil MFA, 2020). BRICS’ foremost achievements have been in the area of financial cooperation, as evidenced by the establishment of the New Development Bank (NDB), the Contingent Reserve Arrangement (CRA), and various other financial coordination mechanisms.

Despite the breadth of the BRICS countries’ financial cooperation and their growing interconnectedness, BRICS’ activities in the monetary realm have been understudied. Yet the stakes of BRICS’ de-dollarization initiatives are particularly high. The US dollar is the dominant currency in the global financial and monetary system and affects various aspects of global affairs. As such, the dollar’s power and prestige have been central to American global leadership (see also Reference Helleiner and KirshnerHelleiner and Kirshner, 2009, p. 1). The NDB’s commitment to using local currency finance rather than solely relying on the US dollar is merely the tip of the iceberg of BRICS’ de-dollarization initiatives. Footnote 1 It is also an open question whether the accelerated de-dollarization process in Russia and China, triggered by their growing tensions with the United States, is only a temporary change, or whether it forms a broader paradigm shift in global finance. To give this some context, the share of the US dollar in Russia–China bilateral trade settlement fell from nearly 90 percent in 2015 to 46 percent in 2020 (Reference SimesSimes, 2020). Moreover, Russia and China have launched their own cross-border payment mechanisms as alternatives to the US-dominated Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. BRICS has also conceptualized a common BRICS Pay system for retail payments and transactions among member countries, which has been enabled by rapid progress in the financial technology (fintech) sector. Such de-dollarization initiatives are happening largely under the radar of contemporary scholarship. Leaders of these initiatives are reform-oriented rising powers, including strategic adversaries of the United States, that have expressed discontent with the existing US-led dollar-based global financial system. Could these empirical cases serve as the “canary in the coal mine” and represent a larger de-dollarization movement?

To systematically examine the nature and impact of these activities, this research seeks to answer a critical question: Can BRICS de-dollarize the US-led global financial system? The underlying assumption of this study is that the dominant currency status of the US dollar may not be permanent. The US dollar’s displacement of the previous hegemonic currency, namely, the British pound sterling, attests to this notion. The importance of examining BRICS’ challenge to the US dollar’s dominance lies in the group’s collective economic power. BRICS accounts for 24 percent of world GDP and over 16 percent of world trade (BRICS India, 2021). Thus, BRICS’ de-dollarization activities would not only impact inter-BRICS financial relations but also create a ripple effect globally. An examination of BRICS’ de-dollarization efforts can help answer the broader question of whether rising powers can gain followers and lead change at a global scale. Can de-dollarization champions within BRICS mobilize less interested BRICS members around this agenda? Can they expand their de-dollarization initiatives beyond BRICS and create economies of scale across several platforms that exclude the United States and other major Western powers, such as the Shanghai Cooperation Organization (SCO)?

Analyzing BRICS as a de-dollarization coalition and how it could mobilize other actors will contribute new and needed insights to the scholarship on rising powers and their impact on US global leadership. This study examines how the US dollar’s dominant position in the global financial system, the very foundation of its global leadership, can be undermined. This topic has important national security implications for the United States. The United States relies upon the dollar’s dominant currency status to credibly exercise coercive economic statecraft and sanction its adversaries. An increasingly de-dollarized world would weaken the United States’ ability to alter the behaviour of its adversaries and could consequently magnify US national security threats.

To investigate whether BRICS can de-dollarize the US-led global financial system, we develop an analytical framework called “Pathways to De-dollarization.” This framework explains how a rising power coalition can pursue de-dollarization to challenge the dollar hegemony. It complements existing scholarship on the dominant currency paradigm, currency statecraft, collective financial statecraft, and the political economy of rising power coalitions. Our framework conceptualizes two sets of risk mitigation strategies that rising powers can pursue simultaneously to reduce their rising risk exposure to the dollar’s hegemonic power: “go-it-alone” and “reform-the-status-quo.” Both enable a rising power coalition, such as BRICS, to pursue de-dollarization as a means of reducing risk exposure to the US dollar and US sanctions. More broadly, these de-dollarization strategies can help the rising power coalition achieve greater financial and geopolitical autonomy and/or increase its global influence. “Go-it-alone” de-dollarization strategies refer to initiatives to establish and govern new nondollar-based institutions and/or market mechanisms. Such measures enable coalition members to diversify currency risks and maintain open access to the global financial system when facing US sanctions. The expansion of these initiatives could lead to the formation of an alternative or parallel system that is independent of the US dollar and the rules made by leading Western powers. In contrast, “reform-the-status-quo” initiatives refer to coalitional efforts to renegotiate the rules of the existing system. Such initiatives involve collective bargaining with incumbent powers to dilute the US dollar’s dominance. If successful, these reform-oriented initiatives would diversify the representation of currencies in the existing system.

Following these two strategies, our framework analyzes institutional and market mechanisms through which a rising power coalition can attempt to de-dollarize the existing global financial system.

This “Pathways to De-dollarization” framework is applied to examine BRICS’ de-dollarization activities. By doing so, this study presents the first systematic analysis of de-dollarization initiatives by a rising power coalition. We find that BRICS members have demonstrated an unambiguous consensus and a strong commitment to promoting the use of local currencies in international settlements and building a nondollar alternative global financial infrastructure. They have simultaneously pursued both “go-it-alone” and “reform-the-status-quo” initiatives. For example, BRICS has established the NDB to de-dollarize development finance. The group has also been planning the launch of a common payment framework that can be integrated with a BRICS digital currency to de-dollarize global financial infrastructure.

Most de-dollarization initiatives have taken place at the sub-BRICS level. For example, China has successfully launched the yuan oil futures contract, a new financial instrument to de-dollarize the global oil trade. Both China and Russia have developed their own cross-border messaging systems. BRICS has also collectively pursued reformist approaches, such as creating the dollar-based CRA, advocating for the reform of the IMF Special Drawing Rights, and forming a BRICS stock exchanges alliance within the existing system. Together, these initiatives suggest that BRICS has not only attempted to reform the existing system to better incorporate its interests but has also created a nascent de-dollarization infrastructure that supports global de-dollarization in the long term. BRICS’ collective efforts to establish an alternative nondollar financial system have the potential to completely immunize participants from both exchange and sanction risks stemming from the dollar’s dominance and US hegemonic position. In the long run, the BRICS de-dollarization infrastructure may even serve as the basis for a broader de-dollarization coalition that includes regional organizations. This coalitional de-dollarization infrastructure could be attractive to US allies who seek greater monetary autonomy and to continue trading with countries that are under US sanctions. For example, the Bank of England Governor Mark Carney (2019) told central bankers at the Jackson Hole Symposium that the dollar’s dominance is the “destabilizing asymmetry” growing “at the heart of international monetary and financial system.” He proposed a new

Synthetic Hegemonic Currency possibly provided through a network of central bank digital currencies (Reference CarneyCarney, 2019). Similarly, the BRICS countries are in the process of developing a BRICS digital currency called BRICS Coin, which sets the stage for digital de-dollarization.

The emerging BRICS de-dollarization infrastructure does not yet allow the BRICS members to make a complete break from the existing US dollar-based financial system. BRICS de-dollarization initiatives are predominantly happening at the sub-BRICS level and have not achieved the necessary economies of scale to de-dollarize the existing global financial system. Two major constraints prevent BRICS from forming a unitary de-dollarization coalition. First, some BRICS members have closer relationships with the United States than with fellow BRICS members. This is evident in the case of India and its relationships with the United States and with China. While this prevents BRICS members from adopting a formal, cohesive de-dollarization strategy in the near term, they may still informally pursue de-dollarization initiatives. Second, some BRICS members, such as Brazil and South Africa, are less vulnerable to US sanctions and have economies that are more integrated into the dollar system than others. Thus, the BRICS members have neither group-level consensus on de-dollarization nor do they share the same sense of urgency to prioritize de-dollarization. All of them are interested in reducing their dependence on the US dollar, but not all want to be separated from the US-led global financial system. Most BRICS members still hold large amounts of US dollar assets in their reserves, so the weakening of the US dollar imposes losses on them.

Existing financial realities cannot be altered in the near term. Moreover, the potential benefits of de-dollarization come at a cost. Breaking away from the existing dollar-based global system and market structure is analogous to self-imposed isolation from the existing system. BRICS would face significant separation costs, with the most immediate ones being increased costs of cross-border transactions, more expensive capital raising in the dollar-based global markets, and reduced competitiveness of their firms in foreign markets due to a shortage of dollar funding. Whether the BRICS governments could credibly enforce de-dollarization initiatives at the firm level, especially on firms operating in foreign territories where the US dollar is the dominant and preferred currency, is questionable.

Additionally, the dollar is also the global investors’ choice of “safe haven” currency during major economic crises. Investors turned to US dollars during the 2007–2008 global financial crisis and the 2020 COVID-19-related economic turmoil, expecting the dollar to hold its value. In both crises, the US Federal Reserve expanded currency swap lines with several other central banks to provide dollar liquidity. A nondollar system would exacerbate issues created by a lack of access to dollar liquidity in times of crises. Such de-dollarization costs deter countries from willingly revolting against the dollar hegemony. Even Russia, a country that is now actively accelerating its de-dollarization process, is not voluntarily pursuing this agenda. As Russian President Putin said, “Russia did not want to give up the dollar as the reserve currency or means of payment, but it was forced to do it” (TASS Russian News Agency, 2021b).

This Element is organized as follows: Section 2 argues that the existing scholarship on currency power, economic statecraft, and BRICS as a coalition lacks a systematic explanation for BRICS coalitional behaviour in the de-dollarization space. It introduces a new analytical framework to address this gap. Section 3 traces the emergence of de-dollarization in BRICS cooperation and evaluates BRICS’ collective commitment to de-dollarization. Section 4 analyzes BRICS “go-it-alone” initiatives to de-dollarize by establishing new institutions and new markets. Section 5 investigates BRICS’ “reform-the-status-quo” initiatives to disrupt the US-led global financial system from the inside. Section 6 presents the findings, discusses the implications of the BRICS de-dollarization coalition for US global leadership, and concludes with suggestions for areas of future research.

2 A Coalitional De-dollarization Challenge?
This section discusses the three categories of scholarship that are most relevant for examining how rising powers could pose a coalitional de-dollarization challenge: (1) the international political economy literature on currency power, economic statecraft, and the international monetary system; (2) the international relations literature on rising powers and rising power alliances; and (3) the BRICS studies literature. While these three fields of study offer insights into some aspects of our research question, none of them explicitly addresses the question of rising powers’ monetary coalitions, especially BRICS as a de-dollarization coalition. To address this gap, we first introduce the empirical puzzle, then present the “Pathways to De-dollarization” framework, and finally discuss our research design and data sources.

2.1 An Understudied Issue: De-dollarization through BRICS
A major area of focus for existing scholarship on international monetary relations, currency power, and economic statecraft has been the establishment of the US dollar as the world’s dominant currency (both as the most commonly held reserve currency and as the most widely used currency for international settlement), and its implications for US global leadership. Scholars have thoroughly investigated the US dollar’s currency power from the perspective of the dollar’s international currency status.Footnote 2 Since the global financial crisis, many scholars have reevaluated the role of the US dollar in the global economy and with respect to US global leadership. They explained how the international use of the US dollar helped build American hegemony; how the dollar’s primacy serves as a source of US prestige; and how the United States has used the dollar to assert its global influence (Reference KirshnerKirshner, 2008; Reference GoldbergGoldberg, 2011; Reference SteinerSteiner, 2014). Some scholars argued that the root cause of global economic imbalance and the 2007–2008 global financial crisis was the lack of institutionalized currency cooperation (Reference LiuLiu, 2014; Reference Que and LiQue and Li, 2014). Thus, a proposed postcrisis solution for liquidity surpluses due to ultralow interest rates was to create a multicurrency global reserves system and reduce the dependence on the US dollar (Reference XiangXiang, 2014).

Historically, the establishment of a dominant currency and the transition from one dominant currency to another did not come as the result of unilateral or collective efforts made by states. For example, the death of the Dutch guilder as a dominant currency in Europe was not the product of the activism of the Bank of England. Rather, the guilder’s loss of reserve currency status was primarily due to a permanent market loss of confidence in the Bank of Amsterdam that suffered from policy insolvency, meaning the net worth was negative under its policy objectives (Reference Stella and LönnbergStella and Lönnberg, 2008; Reference Quinna and RoberdsQuinna and Roberds, 2016). Similarly, the Bretton Woods Conference formally recognized the US dollar’s global reserve currency status, without the US government imposing this status on other states (Reference Eichengreen and FlandreauEichengreen and Flandreau, 2008). The Japanese government’s attempt to internationalize the yen through multiple mechanisms, such as establishing an offshore market and increasing Japan’s foreign aid using the yen, failed due to Japan’s economic stagnation since the 1990s (Reference Wu and WuWu and Wu, 2014). The US dollar’s dominance has also been discussed relative to other rising international currencies.

Potential challengers to the dollar hegemony are currencies with a growing influence in international monetary affairs. These include the euro, followed by the renminbi. Footnote 3 However, the inherent flaws with the euro and renminbi constrain these two currencies’ capacity to become the next dominant global currency. In the case of the euro, despite being the second most important global currency after the US dollar, its international role has largely stagnated over the past two decades. The financial market for euro-denominated assets lacks the size and depth of the dollar-denominated market, constraining the euro’s capacity to challenge the dollar hegemony in global financial markets. Similarly, the renminbi lags behind the dollar in financial market size and depth. It has the additional problem of a lack of free international capital flows. Thus, scholars have generally agreed that the US dollar remains the world’s dominant currency and that no alternative currencies have yet presented a credible challenge to its supremacy (Reference Helleiner and KirshnerHelleiner and Kirshner, 2009; Reference EichengreenEichengreen, 2012). Given the absence of a historical precedent of a rising power de-dollarization coalition, existing research has yet to sufficiently explain the mechanisms and prospects of BRICS’ collective de-dollarization initiatives.

Prior research has identified a broad global trend toward financial sector de-dollarization, starting in the early 2000s and continuing until the global financial crisis. However, this trend has generally stalled or even reversed in many countries, with only a few exceptions, such as Peru (Reference Catão and TerronesCatão et al., 2016). Recent scholarship on economic statecraft has examined de-dollarization activities of countries that are subject to US sanctions and the impact of these activities on US foreign policy and the global monetary system. While acknowledging that countries under US sanctions have a shared incentive to de-dollarize their cross-border settlements, scholars disagree regarding the long-run impact of these individual de-dollarization initiatives on the US dollar’s dominance and on the global currency system (Reference Mathews and SeldenMathew and Selden, 2018; Reference McDowellMcDowell, 2020; Reference Andermo and KraghAndermo and Kragh, 2021). Despite the growing theoretical and policy debates on de-dollarization, the extant scholarship has not systematically examined coalitional de-dollarization initiatives conducted by a motivated group such as BRICS. Addressing this gap in the existing literature has not only theoretical relevance but also policy implications. An inability to comprehensively understand emerging de-dollarization coalitions could lead US policymakers to neglect and underestimate coalitional challenges to the US global financial leadership.

The contemporary international relations literature on rising power coalitions has developed primarily along the dichotomy between rising power alliances and the incumbent power. In this context, rising powers seek to increase their status and influence as agenda-setters and norm-makers in global governance.Footnote 4 The alliance concept has traditionally been defined from the hard security perspective as a “formal association of states for the use (or non-use) of military force, in specified circumstances, against states outside their own membership” (Reference SnyderSnyder, 1997, p. 4). Recent scholarship has argued that rising powers form versatile alignments rather than security-focused alliances, and that they are unlikely to pursue military alliances to challenge US leadership due to their economic and financial embeddedness in the existing system (Reference Chidley, 2014; Reference Han and PaulHan and Paul, 2020). In the absence of hard balancing and military threats from rising powers, some scholars suggest that rising powers use soft balancing or “nonmilitary tools to delay, frustrate and undermine” US global leadership (Reference PapePape, 2005). Such challenges ultimately depend on rising powers’ ambitions and whether they are reformers, reform-oriented status quo powers, revolutionaries, counterrevolutionaries, or rational revisionists (Reference LiptonLipton, 2017; Reference DreznerDrezner, 2019).

Existing scholarship has theorized about the conditions under which a rising power coalition would pursue various counter-hegemonic strategies. The coalition can challenge the incumbent leadership with a “go-it-alone” (Reference GruberGruber, 2000) approach: Its members could exclude the United States and operate outside of the existing system, thereby limiting US policy options rather than coercing or persuading the United States to change its ways. Existing global institutions are likely to be challenged in areas where the preferences of the incumbent and the rising powers diverge: these are the areas where states will be motivated to create new institutions (Reference HenningHenning, 2017; Reference Stephen and ParízekStephen and Parízek, 2019). To exercise collective financial statecraft, a rising power coalition can make reforms within the established system or establish new and competing structures, and it can use institutions and markets as the two venues for action (Reference Katada, Roberts and ArmijoKatada, Roberts, and Armijo, 2017; Reference Kruck and ZanglKruck and Zangl, 2020). Although scholars did not specify how a rising power coalition can challenge the dollar hegemony, they discussed the core choice of working inside versus outside the system.

Prior scholarship has analyzed rising powers’ coalitional counter-hegemonic challenges in the context of their institutional choices, including establishing new institutions and attempting to reform major existing institutions.Footnote5 For example, the China-led Asian Infrastructure Investment Bank (AIIB) is an example of rising powers’ counter-hegemonic institutionalism, as it epitomizes the discontent of rising powers with US-led multilateral institutions and the tensions between rising powers and the United States in global economic governance (Reference Ikenberry and NexonIkenberry and Nexon, 2019). However, rising powers’ “market choices” and the relevance of the status quo of market instruments for coalitional mobilization have been less discussed. Existing literature has illuminated the potential use of blockchain-based self-executing contracts to achieve trade de-dollarization among small groups of countries, such as BRICS (Reference AggarwalAggarwal, 2020).

Currency swaps and cryptocurrencies could also be used to de-dollarize global oil trade (Reference LadasicLadasic, 2017). But these proposals have not systematically evaluated the mechanisms through which a collective de-dollarization coalition could be mobilized, and how such a coalition could achieve economies of scale. As a result, existing literature has overlooked the challenge of rising powers’ monetary alliances. Thus, it risks underestimating the coalitional scope and credibility of a rising powers alliance, especially if the members of such an alliance have shared frustrations with the dollar and have the financial resources to create their own markets and institutions.

The question of whether BRICS can curb the dollar’s “exorbitant privilege” has received attention in the early literature on BRICS’ collective financial statecraft. Reference Bruetsch and PapaBruetsch and Papa (2013) examined BRICS associational dynamics in the currency realm and found that BRICS generated shared narratives to reduce the dollar’s privilege, but its members’ divergent interests and disagreements about possible solutions undermined coalitional efforts.

Subsequently, scholars have evaluated BRICS’ performance both as a financial coalition and as an entity for collective mobilization. Most importantly, BRICS has led emerging markets in changing the global financial order by developing alternative sources of emergency assistance and development financing to create a system that better serves its interests and ideas (Reference Huotari and HanemannHuotari and Hanemann, 2014; Reference DreznerDrezner, 2019; Reference Kring and GallagherKring and Gallagher, 2019). However, while acknowledging that BRICS financial cooperation is deepening, scholars disagree on the prospects and credibility of BRICS’ initiatives to transform the existing global system. Some have doubts regarding BRICS’ potential to act as a system transformer, whereas others hold that the format of BRICS as an informal institution may allow it to gain considerable power (Reference Cooper and FarooqCooper and Farooq, 2013). Reference GallagherGallagher (2015) reconciled these scholarly differences by providing evidence to demonstrate that it is possible for BRICS to “take advantage of a fragmented and disparate global economic governance landscape to leverage benefits” under unique circumstances.

A prerequisite for BRICS to present itself as a credible de-dollarization coalition is its ability to create a robust coalition. Although existing literature has not explicitly discussed the robustness of BRICS’ collective de-dollarization initiatives, it has shown that BRICS has exercised “collective financial statecraft” to challenge the existing liberal international order (Reference Roberts, Armijo and KatadaRoberts et al., 2017). In particular, institutions such as the NDB and the CRA are examples of BRICS’ collective mobilization to reform global financial governance (Reference ChinChin, 2014; Reference Biziwick, Cattaneo and FryerBiziwick, Cattaneo, and Fryer, 2015; Reference Qobo and SokoQobo and Soko, 2015; Reference CooperCooper, 2017; Reference Suchodolski and DemeulemeesterSuchodolski and Demeulemeester, 2018). BRICS has not only transformed the traditional power structures within the existing system, such as the World Trade Organization, but also served as the foundation for broader developing-country coalitions to challenge US hegemony (Reference HopewellHopewell, 2017).

Other scholars are more critical of BRICS’ collective mobilization. Some argue that BRICS is unlikely to become a plausible anti-Western alliance that can credibly undermine US leadership and transform the existing international order (e.g., Reference LuckhurstLuckhurst, 2013). BRICS’ ability to change the existing system is arguably undermined by the group’s political, economic, and ideological heterogeneity (Reference Radulescu, Panait and VoicaRadulescu, Panait, and Voica, 2014; Reference TierneyTierney, 2014; Reference LiLi, 2019); the power asymmetry within BRICS (Reference PanditPandit, 2019); and its lack of a collective world order vision marketable to the broader international community (Reference NuruzzamanNuruzzaman, 2020). Even in development finance, which is often cited as evidence that BRICS is a counter-hegemonic group, scholars contend that the different development assistance models among individual members could weaken a coherent BRICS model (Reference LiLauria and Fumagalli, 2019). BRICS’ failed attempt at creating its own credit rating agency is a demonstration of the group’s limited capacity to transform the global financial order through collective institutional innovation (Reference Helleiner and WangHelleiner and Wang, 2018).

Finally, among prior scholarship that examined BRICS financial cooperation through the cases of the NDB and the CRA, a few evaluated the outlook of de-dollarization through these BRICS-governed multilateral financial institutions (Reference ChossudovskyChossudovsky, 2018; Reference KievichKievich, 2018). However, existing research has not fully investigated the wide range of de-dollarization initiatives that BRICS members have experimented with. Nor has it systematically explored the nature of BRICS’ “coalitional de-dollarization.” This extant research also lacks a comprehensive analysis of how BRICS has engaged with other non-BRICS actors to achieve economies of scale for their de-dollarization initiatives.

2.2 The Puzzle: Is BRICS a De-dollarization Coalition?
It is puzzling why BRICS remains understudied as a de-dollarization coalition for two reasons. First, given the aggregate size of the BRICS economies and markets, as well as the risk of sanctions, the BRICS countries should theoretically have the collective motivation to de-dollarize their international settlements to reduce currency and sanction risks. Historically, all five members have experienced US sanctions, with Russia and China still under various levels of US sanctions. The shared frustrations of the five members should provide strong incentives for them to mobilize toward de-dollarization. Second, reducing dependence on the US dollar and diversifying the global currency and financial system was a publicly declared priority for BRIC when the group first gathered in 2009. When South Africa joined in 2010, BRICS reiterated its shared interest in this issue. Since BRICS is the first rising power coalition with a strong commitment to reforming global financial governance, examining its de-dollarization initiatives presents a unique opportunity for advancing scholarly research on the political economy of coalitional de-dollarization.

The BRICS countries also face a dilemma: While they would prefer to have alternatives to the US dollar as the dominant currency, the dollar’s depreciation would decrease the value of their large holdings of dollar-denominated assets. Thus, they need to balance between their desire for greater international influence and financial autonomy and the material costs of weakening the US dollar’s dominant currency position. This balancing is not only a critical issue for BRICS, but it also has direct policy implications for other countries and regional organizations. Given BRICS’ political and economic significance, its coalitional de-dollarization initiatives will directly impact the US dollar’s dominance in the existing global financial system and US global leadership.

While outlining this research puzzle, it is also important to clarify that de-dollarization in this study should not be confused with replacing the US dollar with another global hegemonic currency. BRICS de-dollarization initiatives are not about the group’s collective support for renminbi internationalization or the internationalization of any other national currency. This research focuses on coalitional de-dollarization pathways and seeks to capture important mechanisms that the five members have pursued to reduce their dependence on the US dollar. Additionally, this research focuses on de-dollarization in the context of international settlements rather than domestic monetary de-dollarization.

2.3 The Analytical Framework: Pathways to De-dollarization
Our analytical framework builds on the assumption that given the tangible costs of being completely isolated from the dollar-based system, members of a rising power coalition do not voluntarily initiate a wholesale revolution against the system. Instead, their de-dollarization initiatives are likely to be reactive to the dollar’s dominance, seeking to correct the “destabilizing asymmetry” (Reference CarneyCarney, 2019) of the dollar’s hegemonic power in the global economic and financial system. Thus, they aim to mitigate the risk of being subject to the US dollar’s hegemonic power so as to achieve higher autonomy and seek broader influence in the global system.

A de-dollarization coalition is likely to emerge when members of the dollar-based system are dissatisfied with the international status quo, including the dollar’s exorbitant privilege, the incumbent US global leadership, and the existing rules and norms. Rising powers continuously renegotiate the international status quo as they seek to increase their influence and status, aspiring to become rule-makers and agenda-setters in global finance (Reference CohenCohen, 2005a, 2005b, Reference Cohen2018). However, their dissatisfaction with the system is particularly pronounced and gives rise to a counter-hegemonic coalition when they face direct threats to their financial and geopolitical autonomy. Such threats include being targeted by hostile and coercive policies or having the existing system experience a severe crisis or a shock. The former occurs when, for example, the international financial infrastructure (e.g., SWIFT) is deployed to coerce a targeted actor to change its behavior (Reference Farrell and NewmanFarrell and Newman, 2019; Reference Drezner, Farrell and NewmanDrezner, Farrell, and Newman, 2021).

This leads the actor to turn against the hegemon and build coalitions to resist external pressure. In the latter case, the shared frustration with the crisis and the perceived decline of the existing dollar-based system enabled the rise of coalitional de-dollarization initiatives. Coalitions can help their members survive the crisis and steer the system toward their preferred outcomes. For the de-dollarization coalition to materialize, coalitional members must have the political and economic capacity to influence the dollar system (Reference GoddardGoddard, 2018).

Our proposed “Pathways to De-dollarization” framework conceptualizes various channels through which a rising power coalition and its members can mitigate the risk of operating in the dollar-based system. Rising powers can mitigate this risk using two main approaches (drawing on Reference HirschmanHirschman, 1970; Reference GruberGruber, 2000). One approach is to hedge the risk by developing an alternative nondollar-based system that allows rising powers to maintain direct economic and financial connections with other countries in the world without resorting to the dollar-based system. This is the “go-it-alone” strategy, referring to de-dollarization policy options outside the existing dollar-based system and building new, nondollar structures. The other approach is to pursue risk insurance and risk diversification by using “voice” to initiate changes and improve the existing dollar-based system. This is the “reform the status quo” strategy, referring to the pursuit of reforms within the existing system to dilute the dollar’s dominant currency status.

These two approaches are not mutually exclusive. First, the “go-it-alone” strategy can create an “exit” from the existing system. However, this strategy cannot be completely separated from the existing system because it still depends on it to mobilize the necessary resources to challenge the system. Second, rising powers may use the potential “exit” as a source of leverage when reforming the existing system, so the threats of exit and parallel institutions serve as a means to increase voice in incumbent institutions (Reference LipscyLipscy, 2015). Finally, in their pursuit of autonomy and influence, rising powers can engage with both institutional mechanisms and market mechanisms to implement both strategies. Table 1 visualizes the Pathways to De-dollarization framework by offering an illustrative list of common pathways.

Table 1 Pathways to de-dollarization: Institutional and market mechanisms (an illustrative list)
Risk mitigation mechanisms mitigation strategy
“Go-it-alone”“Reform-the-status-quo”
InstitutionsCreate new multilateral financial institutions for nondollar financing outside the existing institutionsStrengthen central banks’ self-defence against the dollar hegemony and improve emergency access to dollar liquidity
Promote and popularize nondollar institutions through broader engagementReform and diversify the existing global reserve currency structure
MarketsCreate new alternative nondollar financial instruments and assets in the marketDiffuse the dollar’s dominance as the vehicle currency and promote the use of local currency in cross-border transactions
Create and promote alternative nondollar financial infrastructures for the marketRearrange global equity market structure and create a nondollar equity markets alliance

Based on this analysis, we propose the following:
Proposition 1: When rising powers seek greater financial and geopolitical autonomy in response to a perceived threat of sanctions and currency risk, they are likely to focus on developing and accelerating “go-it-alone” strategies that emphasize the creation of new nondollar-based institutional and market mechanisms. While developing alternative institutions and markets is a long-term project and requires significant resources, rising powers would pursue fairly low-cost and near-term “reform-the-status quo” strategies to increase access to the existing trading system and global capital by using nondollar currencies and diffusing the dollar’s dominance. A rising power coalition can promote the use of local currency in the existing global trading system to weaken the US dollar’s dominant vehicle currency status. Its members can reduce their own holdings of US dollar reserves or dollar-denominated assets to defend themselves from currency and sanction-related risks.

The coalition can also seek to diversify the existing global currency composition by promoting alternative currencies, such as other national currencies, supranational currencies, or even digital currencies. Finally, coalitional members can also create and expand nondollar-based equity markets in the existing global financial system to divert capital away from the dollar-based markets.

Applied to the BRICS context, we hypothesize that Russia, as a country continuously under Western sanctions, as well as other economies that are negatively affected by the dollar volatilities, would be leading BRICS’ “go-it-alone” de-dollarization strategy, mobilizing other BRICS countries around de-dollarization initiatives and using a wide range of de-dollarization pathways.
Proposition 2: When rising powers are not under an immediate threat of sanctions, they are likely to stay loyal to the US dollar system and prioritize “reform the status quo” strategies in the near term. The dominant currency paradigm literature suggests that the US dollar’s wide use in international transactions pulls other countries into the dollar-based system (Reference Gopinath, Boz, Casas, Díez, Gourinchas and Plagborg-MøllerGopinath et al., 2020; Reference Gopinath and SteinGopinath and Stein, 2021). However, while some path dependence can be assumed in the short term, ambitious rising powers seeking to diversify the system will use both “reform the status quo” and “go-it-alone” de-dollarization strategies to increase their financial and geopolitical influence. Figure 1 visualizes the key areas of US dollar hegemony that a larger de-dollarization mobilization needs to consider.


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Figure 1 A visualization of the US dollar’s dominance
Figure 1 categorizes the various expressions of the US dollar’s dominant currency status into three primary areas: real economy, funding, and investability. These three overarching categories cover the specific areas that constitute the structural constraint that any reactive de-dollarization initiative has to consider. More specifically, the US dollar is the dominant global reserve currency and enjoys the highest weight in the Special Drawing Rights (SDR) basket. It is also the dominant invoicing currency in international trade; the leading currency across global financial infrastructure; and, it has the dominant pricing power in major global commodities. The dollar also dominates the space of development financing, bank deposits, and global corporate borrowing. Finally, the dollar is the leading currency in terms of investability as it dominates global equity markets and is the primary safe-haven currency in times of economic and financial crises. Applied to the BRICS context, since all of the five BRICS countries seek greater financial and geopolitical influence, we hypothesize that they will challenge the dom

https://static.cambridge.org/binary/version/id/urn:cambridge.orgbinary:20220310070403598-0456:9781009029544:01462fig5.png?pub-status=livehttps://www.forexfactory.com/thread/...4KPC9zdmc+Cg==

Figure 5 Leading global futures exchanges by crude oil contract open interest.
Note: Shanghai International Energy Exchange series began on March 30, 2018. Open interest is the total number of futures contracts outstanding.
Source: Author compiled data from Bloomberg Financial
With the recent escalation of the US–China trade war, China has accelerated its promotion of a possible petroyuan, renminbi-denominated oil trading. In 2021, Chinese Foreign Minister Wang Yi went on a week-long tour of Saudi Arabia, Turkey, Iran, the UAE, Bahrain, and Oman. This trip was seen as a signal of China’s intention to secure long-term energy deals with major Gulf energy producers to dictate oil pricing terms and fuel the rise of the petroyuan (Reference YeungYeung, 2021). With China’s push for the use of renminbi in oil pricing and trading and the strong global demand for a nondollar denominated oil trading mechanism, “the renminbi-denominated oil trading is likely to become more significant, partially displacing US dollar oil trading in one market after another” (Reference Mathews and SeldenMathews and Selden, 2018). The prospect of a petroyuan would make it possible for countries under US sanctions, especially major oil exporters such as Iran and Russia, to access global markets via an alternative currency and nondollar payment systems, thereby weakening the effectiveness of US sanctions power.
China’s primary motivation for promoting its yuan oil futures is to encourage the use of renminbi in oil trading and risk hedging, especially in the settling of physical oil deliveries to reduce exchange risks. The Chinese government cannot singlehandedly launch the yuan oil futures and ensure the fast growth in trading volume because commodities trading requires buyers and sellers. The fact that the yuan oil futures have been launched successfully and the trading volume has expanded indicates that there is great interest in the market to de-dollarize the global oil trade.

Russia also has a strong interest in de-dollarizing the global oil trade because major Russian energy companies have been under US sanctions since the Ukraine crisis in 2014. Being the world’s largest oil and natural gas exporter, Russia’s economic security revolves around vital oil and gas revenues. Oil and gas accounted for 60 percent of Russia’s export revenues and nearly 40 percent of government revenues in 2017 (Russian Matters, 2018). BRICS supported Russia after the United States imposed sanctions on Russian companies. In June 2017, BRICS foreign ministers condemned “unilateral military intervention or economic sanctions in violation of international law and universally recognized norms of international relations” (China MOFA, 2017). China’s launch of the yuan oil futures provides a crucial alternative trading platform for Russian oil companies and Russian oil consumers.

The potential of the yuan oil futures to advance global oil trade de-dollarization goes even further when considering the linkage to gold. China has sweetened the yuan oil futures by providing trading infrastructure to facilitate swapping oil into gold, with the renminbi serving as an intermediary funding step. If BRICS had their own pricing benchmark for gold – rather than being subject to London or New York’s pricing – this infrastructure would potentially complete the goal of de-dollarizing the global oil trade, making it possible to trade oil using gold with minimum exposure to exchange risk. Sergey Shvetsov, the First Deputy Chairman of Russia’s central bank confirmed in 2017 that BRICS countries were discussing the possibility of establishing a single gold trading system, both within BRICS and at the level of bilateral contracts (TASS, 2017). Shvetsov previously raised this theme at the bilateral level during his visit to China in 2016 (TASS, 2016). Such developments signal a potential BRICS alliance in the global physical gold market, where BRICS countries have major stakes: China, Russia, South Africa, and Brazil are major gold producers, and China and India are also the world’s two largest gold consumers. A BRICS single gold trading system would facilitate the creation of a new gold pricing benchmark based upon global physical gold trading rather than gold derivatives. Combined with the gold-backed trading of yuan oil futures, oil producers could swap oil for gold rather than for US Treasury securities, further de-dollarizing the global oil market. Apart from de-dollarization, a BRICS single gold trading system would also help to strengthen domestic currency stability because it would free BRICS members from being subject to foreign pricing.

4.3 BRICS Alternatives to SWIFT and De-dollarizing Global Financial Infrastructure
In another effort to reduce their dependence on the US dollar, BRICS members have been building their own global payment infrastructures for international transactions that are independent of the US dollar and can serve as alternatives to SWIFT, the leading messaging network for financial transactions worldwide. This allows BRICS members, especially those who are often subjects of US sanctions, to create their own rules for international banking and settlement. Moreover, by extending alternative financial infrastructure to other countries and regions, BRICS can create greater buy-in for their own system and increase their financial and political influence through this alternative system.

Some BRICS members have independently developed their own cross-border payment mechanisms in recent years. Both Russia and China have launched their national alternatives to the SWIFT global banking network and introduced their systems to broader global markets. China’s development of the renminbi cross-border payment system took place in the context of building the BRI’s financial infrastructure and renminbi internationalization. The added benefit of promoting broader use of the renminbi was to reduce foreign exchange risk and US sanctions risk for both China and its trading partners that may be under US sanctions, such as Iran or Russia. For Russia, establishing an international ruble payment system was the government’s direct response to the heightened threat of Western sanctions since the Ukraine crisis in 2014. China and Russia recently established a direct payment settlement system with each other, with the intention to combine it with payment systems in other BRICS members and BRI countries in Eurasia. Russian officials also revealed that the other BRICS members would support the establishment of a common payment system at the BRICS level (Reference HamiltonHamilton, 2019; Reuters, 2019c).
BRICS countries, with the exception of South Africa, have developed their own independent national payment systems, wholesale payment networks paired with a retail bank card network.Footnote14 China and Russia have been leading the development of independent national payment systems, which are analyzed in more detail below as they might serve as building blocks for a larger BRICS-wide payment system or even one beyond BRICS in the future. An independent retail bank card network is a set of payment rails that establish protocols and procedures for the execution of retail payments and the exchange of related information among banks for final settlement over wholesale payment networks. An obvious benefit of having an independent retail bank card network, rather than relying upon leading American card network providers such as Visa or Mastercard, is to avoid the fees charged by these service providers. However, more importantly, if a country does not have its own payment rails and relies upon those of Visa or Mastercard – as pre-2014 Russia and pre-2002 China did, and as South Africa currently does – then those payment rails could be unilaterally withdrawn as a part of US sanctions. This withdrawal leaves domestic consumers without the ability to conduct basic retail transactions using bank cards. Connecting these national payment rails to an alternative cross-border payment system would allow the entire life cycle of payments to be carried out while entirely bypassing the US dollar-denominated global system.

4.3.1 China
Over the past decade, China has broadened the international coverage of the renminbi-based financial infrastructure featuring China’s own cross-border payment system and UnionPay bank card network. China launched the Cross-Border Interbank Payment System (CIPS) for onshore renminbi clearance and settlement services in 2015. The goal is to promote greater use of the renminbi and support renminbi internationalization. Within two years, CIPS’ direct participants in terms of high-value payment reached 28, and its indirect participants reached 574, covering 85 countries and regions (Xinhua, 2017). By the end of 2020, the number of CIPS’ direct participants reached a total of 43, and the number of indirect participants reached 1159, 867 of which were in Asia – including 522 Chinese mainland indirect participants – 147 in Europe, 26 in North America, 20 in Oceania, 17 in South America and 39 in Africa (CIPS World Service, 2020a). More than 3,000 banks and other financial institutions have conducted actual business through CIPS (CIPS World Service, 2020b). By the end of 2020, CIPS was processing RMB135.7 billion (USD19.4 billion) daily (Reuters, 2020). The annual business volume reached RMB45.3 trillion in 2020 (CIPS World Service, 2020b), despite the global economic slowdown caused by the COVID-19 pandemic.
CIPS allows global banks to clear cross-border renminbi transactions onshore directly instead of through offshore renminbi clearing banks. This empowers CIPS to serve as an alternative messaging system to SWIFT and thus reduce the risk of exposing transaction information to the United States, thereby mitigating the effect of US sanctions. However, CIPS has not yet departed from SWIFT. It currently uses SWIFT and its standards for cross-border financial messaging to connect with the global system. CIPS also adopted the ISO 2022 international payments messaging standard in order to make it interoperable with other payments systems as well as with correspondent banks around the world. The adoption of the existing cross-border messaging standards serves China’s interest in making CIPS a critical piece of financial infrastructure to promote renminbi internationalization (SWIFT, 2016).

Nonetheless, the current close connections between CIPS and SWIFT do not negate the potential of the new infrastructure to break away from the existing US-dominated cross-border payment system because the adoption of the existing messaging standard fast-tracks the adoption of CIPS by global financial institutions. The more global participants there are in CIPS, the wider its direct communication with foreign financial institutions – and therefore, the larger its potential to operate independently. Moreover, the broader adoption of CIPS will also accelerate the wider use of the renminbi in the international financial system.
Although the renminbi has not yet become an international currency, UnionPay – China’s central bank-approved independent bank card network launched in 2002 – has achieved a significant global presence. It has grown to be the largest supplier of bank payment cards, with over 7.5 billion cards issued worldwide, more than Visa and Mastercard combined (UnionPay Media Reports, 2019). UnionPay began to expand overseas in 2004 and quickly established a global payment network (Reference LiuLiu, 2016). By March 2021, the UnionPay acceptance network extended to 180 countries and regions, over half of which also accept UnionPay mobile payments, and more than 150 million UnionPay cards have been issued in 67 countries and regions outside Mainland China (UnionPay International, 2021). The globalization of UnionPay promotes the use of renminbi in cross-border settlements via outbound Chinese tourism consumption and international merchandise transactions.

UnionPay is widely accepted in all BRICS countries. In Brazil, UnionPay cards were first accepted at Brazilian ATMs in 2006. In March 2021, the acceptance rate of UnionPay bank cards reached 70 percent (Belt and Road Initiative, 2021). In Russia, UnionPay partnered with the Russian National Payments Card System in 2016, allowing both payment networks to accept UnionPay cards and Russian bank cards. This agreement broadened the international use of Russian bank cards (China News, 2016). UnionPay’s acceptance rate in Russia reached over 90 percent in 2019 (People’s Daily, 2019). UnionPay has also promoted its mobile payment feature in Russia. In 2018, UnionPay and Huawei jointly launched their Huawei Pay service in Russia, which was their first joint international market launch. In 2020, UnionPay partnered with Russia’s Solidarnost Bank and Huawei to accelerate contactless payments in Russia and enable cardholders to use Huawei Pay on their Huawei or Honor smartphones (Electronic Payments International, 2020). Regarding India, in 2018, the Reserve Bank of India approved the cooperation between UnionPay and the National Payments Corporation of India, which runs the country’s “RuPay” bank card network. This approval allowed UnionPay card holders to use all ATMs and point-of-sale terminals in India to withdraw cash or conduct transactions using the Indian rupee (Reference ParmarParmar, 2018). In December 2018, UnionPay cards were accepted at over 90 percent of ATMs in India (Pine Labs, 2018). South Africa’s business with UnionPay started in 2008. Within a decade, UnionPay bank cards became widely accepted for withdrawal service by most ATMs of the four major South African banks. In 2019, the Standard Bank of South Africa launched its UnionPay cards in both virtual and physical form to local account holders to facilitate their payments in China (Xinhua, 2019). Besides working with local banks, UnionPay has also been working with retailers of all sizes in South Africa to enable their point-of-sale (POS) terminals at checkout counters across the country (UnionPay Market News, 2019). Overall, the growth of UnionPay in day-to-day transactions combined with the CIPS infrastructure gives China and other BRICS members an option to de-dollarize bilateral payments using renminbi as an alternative.

4.3.2 Russia
Russia’s de-dollarization initiatives started in 2014 in the wake of US sanctions. Following Russia’s annexation of Crimea, President Barack Obama signed Executive Order No. 13661, which targeted bank cards issued by seven Russian banks. Both Visa and Mastercard stopped processing transactions for their Russian customers, and about 500,000 credit cards and debit cards issued by these seven Russian banks found their payment function frozen (Reference XuXu, 2020). This severely affected Russia’s domestic and international economic exchanges. Moreover, the United States and the United Kingdom also threatened to cut off Russia from SWIFT. In this context, Russia began building two pieces of financial infrastructure that are critical for reducing its exposure to US sanctions, namely (1) an independent national payment system to serve as Russia’s alternative to Visa or Mastercard and (2) a proprietary financial messaging system as Russia’s equivalent to SWIFT.

Russia’s de-dollarization of financial infrastructure started when the Russian State Duma passed the National Payment Card System (NSPK) Act in 2014. This Act established the National Payment Card System Joint Stock Company as the main operation and settlement center of the NSPK, which was owned by Russia’s central bank. In July 2015, through public tender in Russia, the card was named “MIR,” which means both “world” and “peace” in Russian. By August 2017, more than 13.9 million MIR cards had been issued in Russia (representing 10 percent of the Russian population). By the first half of 2019, 312 banks in Russia had joined the system.

Practically all trade and service points, including cafes, shops, restaurants, and petrol stations, now accept payments with MIR cards. MIR cards are also welcomed in sanctions-hit Crimea, where Western banks have been prohibited from operating. MIR’s performance shows other governments how to challenge established payments giants based in the United States, such as Visa and Mastercard.

Since 2014, Russia has also been developing its own proprietary financial messaging system called “System for Transfer of Financial Messages” (SPFS) as the Russian analog to SWIFT. It can be connected to both foreign banks and foreign legal entities. According to the director of the Bank of Russia’s national payment system Alla Bakina, 8 foreign banks and 34 legal entities signed agreements to join the SPFS by 2019 (Reference ChaudhuryChaudhury, 2019b). Traffic through the system has been growing and accounted for around 15 percent of all internal traffic in 2019, up from 10 to 11 percent in 2018 (Reference ChaudhuryChaudhury, 2019b). Moreover, Russia has been actively seeking to expand SPFS’s international presence. Opening up SPFS to foreign banks was part of President Putin’s agenda to further undermine the US dollar after his election victory in 2018. In 2019, Russia and Iran connected their financial messaging systems, linking banks in both countries through SPFS and SEPAM (the Iranian alternative to SWIFT) (Financial Tribune, 2019). Russia also introduced SPFS to banks in the Eurasian Economic Union (EEU) region (Russia Briefing, 2019). The same year, Russian Finance Minister Anton Siluanov signed an agreement with Turkey to start using the ruble and the lira in cross-border payments and settlements, greatly increasing the possibility of connecting Turkish banks and companies to SPFS and using Russian MIR cards in Turkey (Reuters, 2019b). Besides the EEU region and Turkey, Russia also expressed interest in linking SPFS with other countries in the Middle East and European region (Reference ChaudhuryChaudhury 2019b; Reuters, 2019a; Russia Business Today, 2019).

4.3.3 A Potential “China-Russia Plus” Coalition to Create a SWIFT Alternative
Russia has sought to mobilize its BRICS partners, particularly China, to achieve wider acceptance of its MIR card system and greater international coverage of its SPFS infrastructure. In November 2016, Prime Minister Medvedev said that Russia desired a mutually compatible payments system with China that would harmonize the two countries’ national payment systems to preemptively deal with the risk of being cut off from SWIFT (Reference SoldatkinSoldatkin, 2016). He also said that Russia and China discussed the launch of a new cross-border payment system for direct trade invoices settlements in renminbi and ruble. Medvedev made it clear that this initiative was an attempt to move away from the current dollar-dominated financial system and bypass Western sanctions (Reference RolfeRolfe, 2018). In June 2019, Russia and China agreed to deepen cooperation in national payment card systems and cross-border payments in national currencies (TASS Russian News Agency, 2019). In March 2021, Russian Foreign Minister Sergei Lavrov again called for China to work with Russia to reduce their dependence on the US dollar and Western payment systems and push back against the West’s “ideological agenda” (Reference OsbornOsborn, 2021).
On China’s side, the PBoC has improved the efficiency of transactions between the two national currencies. In October 2017, the PBoC approved the China Foreign Exchange Trading System (CFETS) to institute a payment versus payment (PVP) system to facilitate financial transactions between renminbi and ruble. This PVP system can shorten the delivery time lag between the two currencies from at least a day to only a few seconds, which is a major improvement in transaction efficiency and will greatly reduce foreign exchange transaction risk (PRC Gov., 2017). This PVP system was the very first of its kind. Its launch marked the official establishment of a PVP mechanism for transactions between renminbi and foreign currencies in China’s foreign exchange market.

India was reported to have expressed interest in jointly exploring an alternative to SWIFT with Russia and China in order to conduct trade with countries under US sanctions (Reference ChaudhuryChaudhury, 2019b). While India currently does not have its own domestic financial messaging system, it has plans to link a service that is currently under development with Russia’s SPFS, which could possibly be linked with China’s CIPS. Once this is materialized, this linked system would cover most parts of the world (Reference HillmanHillman, 2020, p. 5).

4.3.4 A Common BRICS Payment System and BRICS Digital Currency
A collective and perhaps more ambitious step toward de-dollarization is the “BRICS Pay” system currently under development. It is a single contactless payment system that connects BRICS’ national payment systems with an integrated cloud platform for payment. BRICS Pay will not duplicate the national payment systems that are already in place in the member countries; rather, the system leverages the latest fintech innovations in BRICS countries to integrate BRICS members’ individual payment systems. BRICS Pay will link the credit or debit cards of BRICS citizens to online wallets, which will be accessible 24/7 for payment via a mobile application installed on their smartphones. The BRICS Pay system is part of BRICS’ collective effort to establish a common system for retail payments and transactions between its members. However, BRICS is willing to expand its scope, and non-BRICS countries will also be able to use the platform. The pilot project kicked off in South Africa in early April 2019. In 2020, the Russian BRICS Presidency proposed the idea of a commercial “BRICS Pay” for “BRICS Plus” countries for the consideration of the BRICS Business Council (BRICS Business Council, 2020, p. 67).

The biggest advantage of BRICS Pay is that this proposed integrated payment system would make possible the use of BRICS members’ national currencies as a direct basis of exchange for external payments. Currently, external settlements between BRICS members still require a conversion into US dollars, which requires the engagement of US banks. For example, a yuan-ruble non-cash settlement using UnionPay cannot happen directly; it must be converted into US dollars first. Through BRICS Pay, the conversion to US dollar and US banks would no longer be necessary because payments would be settled using the national currencies of the BRICS members. The BRICS Pay system will also allow the members to reduce their dependence on international payment organizations such as SWIFT, Visa, and Mastercard. It could potentially give BRICS members a shared competitive advantage to compete with traditional banks in the global financial services market, currently dominated by US banks, as well as US rules and norms. The integrated BRICS Pay system connecting the national payment systems of BRICS members while also allowing non-BRICS countries to participate could potentially disrupt the financial dominance of the incumbent Western global financial powerhouses. Russia has expressed that the foundation of a new international payment system is a priority for BRICS as a group which is driven by “increasing non-market risks of the global payment infrastructure” (Banks am, 2019; Moscow Times, 2019b).

Building a common framework for BRICS Pay is the BRICS’ attempt toward de-dollarization through the conventional route of promoting local fiat currencies in cross-border settlements. Meanwhile, BRICS has also been exploring an unconventional route toward this end: the use of blockchain technology to build a BRICS digital currency. During the BRICS Xiamen Summit in 2017, the BRICS Finance Committee discussed the possibility of replacing the US dollar with a BRICS cryptocurrency in settlements among members (RT International, 2017). At the 2018 BRICS Summit, BRICS countries’ development banks signed an agreement to cooperate on blockchain research and digital economy development, thereby working on frontier technological developments together (Vnesheconombank, 2018). They agreed to form a joint research working group, set a research agenda, and carry out research toward identifying potential applications of blockchain technology in the financial sector, particularly in infrastructure financing (Reference SrivatsSrivats, 2018). The 2019 BRICS Summit further prioritized the bloc’s cooperation in blockchain and digital economy (Reference ChaudhuryChaudhury, 2019a). The BRICS Business Council supported the idea of creating a single payment system for settlements between BRICS members during this summit. As the head of the Russian Direct Investment Fund Kirill Dmitriev pointed out, an efficiently operating BRICS payment system can facilitate settlements in national currencies and ensure the stability of settlements and investments among BRICS, which form more than 20 percent of the global influx of foreign direct investment (Reuters, 2019c). A BRICS cryptocurrency could be integrated into the common BRICS payment framework, and it would take the form of a paperless document flow to facilitate transactions. Given that BRICS members have agreed upon blockchain R&D cooperation, it is possible for them to develop this system using blockchain technology (Reference PalmerPalmer, 2019; RBC, 2019).

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Finally, the most comprehensive and effective challenge to the dollar hegemony is if a rising power coalition wages a systematic coalitional de-dollarization campaign and uses a combination of both “go-it-alone” and “reform-the-status-quo” approaches that challenge all the specified areas in which the dollar enjoys dominance. A coalition that can most effectively achieve de-dollarization is one that creates a nondollar club good (e.g., a new institution or market mechanism) that it can govern and use as leverage. Such a coalition can promote the good through broader engagement and even popularize it as a public good to establish an alternative nondollar global system. The “go-it-alone” strategy is more likely than the “reform-the-status-quo” approach to generate such new nondollar club goods. Successful de-dollarization initiatives can not only help rising powers bypass coercive actions but also be weaponized for coercive purposes, and rivals might be denied access. As the initiators of such de-dollarization mechanisms, rising powers would be the dominant rule-makers in a de-dollarized system, likely constraining US policy space and enjoying higher status than their followers.

2.4 Research Design
To examine BRICS’ de-dollarization pathways and whether BRICS can de-dollarize the US-led global financial system, we apply the introduced framework and analyze a wide range of BRICS-related data using qualitative methods, including process tracing, interviews, content analysis, and archival research and quantitative analysis of BRICS-relevant financial data.
First, we combine process tracing and content analysis to identify the key milestones in BRICS’ financial cooperation and de-dollarization initiatives between 2009 and 2021. We investigate the existence of a BRICS de-dollarization agenda and identify the prominent actors in the de-dollarization space. We triangulate key events across different sources ranging from credible local sources in BRICS countries to international media. Second, to evaluate the consistency of BRICS’ commitment to de-dollarization over time, we analyze a variety of archival sources, including speeches and essays by BRICS policymakers, BRICS declarations, BRICS think tank reports, NDB press releases and funding operations, and BRICS Business Council reports. Third, to get a more accurate picture of BRICS policy preferences, we rely upon semi-structured interviews with experts, officials (current and former), central bankers, and financial professionals in BRICS countries who have either participated in BRICS policymaking or published on the issue of BRICS financial cooperation. We identified experts based on our analysis of BRICS documents, credible news reports, BRICS think tanks’ members, and academic publications in leading journals.
We apply the analytical framework by examining a wide range of BRICS de-dollarization initiatives comprising the use of both institutional and market mechanisms to mitigate BRICS members’ risk exposure to the dollar’s hegemonic power. These initiatives include the NDB and development finance de-dollarization; global oil trade de-dollarization; global financial infrastructure de-dollarization through BRICS alternatives to SWIFT; BRICS promotion of de-dollarization initiatives by engaging with non-BRICS members; self-defense measures in US-led institutions against the dollar’s dominance; reforms of the global reserve currency structure; efforts to diffuse the dollar’s dominance as the vehicle currency in trade; and BRICS’ activities in global equity markets. Our Pathways framework allows us to identify and evaluate what members have achieved, and the benchmark of strategic de-dollarization areas illustrates what BRICS should do to de-dollarize. The combination of the two approaches allows us to zoom in and examine the specific strategies each BRICS member pursues, as well as distinguish the BRICS countries leading de-dollarization efforts from the less active members. The resulting analysis allows us to evaluate the overall level of the BRICS’ de-dollarization challenge.

To understand the extent of collective mobilization along the pathways proposed in our framework, we introduce a two-dimensional matrix measuring the effectiveness of de-dollarization initiatives and the level of coalitional strength. The benchmark for a high level of effectiveness is the creation of nondollar institutions and/or market instruments or market infrastructure. Following our conceptualization, the “go-it-alone” strategy leads to a higher level of de-dollarization effectiveness, as it targets the creation of new nondollar mechanisms. In contrast, the “reform-status-quo” strategy yields lower effectiveness due to its lack of mechanism innovations. We measure coalitional strength by the number of participants in a de-dollarization initiative. This is because cross-border settlements in international trade and finance require counterparties and the formation of a nondollar global financial system requires broad participation of state actors and non-state actors. A higher number of participants means that a de-dollarization initiative is more robust. Unilateral initiatives may be potentially scaled to the coalitional level, but they represent a low level of coalitional strength. The coalitional strength increases as more members of the rising power coalition jointly participate in de-dollarization initiatives. Once the coalition builds full consensus, it demonstrates greater coalitional strength. When the rising power coalition expands its de-dollarization initiatives beyond the group members and mobilizes a broader coalition, the coalitional strength is the highest. As Figure 1 illustrates, the combination of high effectiveness and high coalitional strength is in the upper right cell, which features the formation of an alternative nondollar global financial system that is governed by rising powers and not the United States (Figure 2).


https://static.cambridge.org/binary/...ub-status=livehttps://www.forexfactory.com/thread/...4KPC9zdmc+Cg==
Figure 2 Measuring coalitional de-dollarization initiatives
Note: n = number of participants in a de-dollarization initiative (state and non-state actors N = number of formal members in the rising power coalition (in the case of BRICS, N = 5, including Brazil, Russia, India, China, and South Africa).
We augment our qualitative analysis with quantitative data from the NDB’s annual reports, its project database, SWIFT reports and statistics, Bank for International Settlements international locational banking statistics, treasuries holdings data from Bloomberg, the Treasury International Capital System, commodities futures data from the Shanghai Futures Exchange, BRICS reserves data and trading data from the People’s Bank of China, Bank of Russia, South African Reserve Bank, Reserve Bank of India, Central Bank of Brazil, ICE Benchmark Administration, and World Gold Council, and BRICS voting rights data and SDR quota from the World Bank and the IMF.

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"Gold has already defeated long-term Treasuries as the world's reserve asset. Gold won by knockout… throw in the towel, it's over."

In this episode, Luke explains why central banks are stockpiling record amounts of gold, why secrecy itself has become part of the strategy, and how this points to a world preparing for profound change.

This isn't a conversation about headlines, it's about the forces shaping the future of money. I hope you enjoy the discussion.

TIMESTAMPS

(0:24) Luke’s Journey into Macro
(5:24) Disconnect Between Narratives and Reality
(11:14) Why QE pushed him toward gold as a neutral reserve (15:50) Gold’s Unique Role
(16:07) Central Banks and Sovereignty
(17:57) Symbolism or Financial Defiance?
(24:06) The Greenspan Moment — Printing as default avoidance (24:59) Why Gold Flows Are Obscured
(29:45) Quiet Accumulation & Shift in Monetary Order — Why chips must be spread before a new system
(34:12) Gold vs. the Dollar
(38:51) Western Mockery of Gold
(42:45) Could Gold Slip Into Trade Settlement?
(45:40) Stablecoins and Gold
(47:56) Fort Knox and the Vanishing Story — Why talk of audits disappeared
(49:50) BRICS — Net settlement in gold
(55:55) How revaluation could collateralize debt in a reset
(59:51) Lessons From the Nixon Shock
(1:03:05) Luke’s Personal Playbook — How he protects wealth in an uncertain world

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JAMES TURK: THE FEAR INDEX SIGNALS A BANKING COLLAPSE
Egon von Greyerz & James Turk revisit past warnings on currency debasement, debt, and gold, showing why cracks in the global system are now undeniable.
Egon von Greyerz
August 25, 2025 9:15 AM
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Egon von Greyerz and James Turk revisit the themes they first discussed more than a decade ago—currency debasement, reckless credit expansion, and fragile banking systems—pointing out how these problems have only grown larger with time.

Turk concedes the dollar and wider system have survived longer than he expected, but both men stress that history shows collapse is inevitable when money is backed by debt rather than tangible assets.

They reflect on their experiences of the 1970s, when inflation surged, banks wobbled, and currencies carried heavy counterparty risks, noting that back then the U.S. was a global creditor, whereas today it is the world’s greatest debtor. Cryptocurrencies, they argue, are speculative assets behaving like technology stocks, not real money, though Turk sees them as a stepping stone toward tokenized gold. Bonds, meanwhile, are described as broken beyond repair, leaving central banks to prop markets with liquidity that only weakens fiat currencies further.

Unlike past localized crises, this one is global, compounded by weak political leadership, social instability, and heightened geopolitical conflict. In such an environment, they conclude, the case for holding physical gold and silver outside the financial system is stronger than ever. As Turk reminds, his long-used Fear Index—which measures the gold backing of the U.S. dollar—remains historically low but is now rising, a clear signal of mounting systemic stress and an approaching banking collapse.

THE FEAR INDEX
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The Fear Index simply measures the value of the weight of gold backing the US dollar.
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Key Insights:

1. 00:00 – Opening greetings, introduction of James Turk.
2. 01:26 – Discussion on how James started and how things have developed.
3. 02:01 – Launch of GoldMoney in 2001 and concerns about the dollar.
4. 03:03 – Comparison of the 1970s economy vs today, U.S. creditor vs debtor nation.
5. 04:49 – Early career story about Dixons, stock market collapse experience.
6. 05:25 – James recalls the Herstatt Bank collapse and lessons on sound money.
7. 06:19 – Concept of “peak banking” and technology changing payments.
8. 07:07 – Discussion on cryptocurrencies and the Trump family’s involvement.
9. 08:00 – Contrast between cryptocurrencies and gold as money.
10. 09:54 – Bitcoin compared to tulip mania, risks of leverage and manipulation.
11. 11:04 – Bitcoin’s correlation with Nasdaq and potential upside.
12. 13:27 – The “fear index” and banking crisis warnings.
13. 14:57 – Global crisis outlook; U.S. debt unsustainability.
14. 15:28 – Revaluation of U.S. gold reserves, constitutional money system.
15. 17:00 – Debate on revaluation as a “fig leaf” and BRICS gold trade.
16. 17:56 – Risk of defaults, banking collapse, civil unrest.
17. 19:28 – Geopolitical risk: Ukraine war and weak leadership.
18. 21:07 – James warns about political repression vs financial repression.
19. 23:26 – Risks of sociopathic leadership, political repression examples.
20. 23:29 – Nuclear war scenario (72 seconds to destroy the world).
21. 24:29 – NATO expansion, Russian paranoia, Putin’s position.
22. 25:51 – U.S.-surrounded analogy (Canada, Mexico) vs Russia and NATO.
23. 26:30 – Conclusion: importance of learning from history and holding gold.

WEALTH PRESERVATION NOTE
Egon von Greyerz
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The Collapse Of The Democratic Party And Its Deep State Forces


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by Tyler Durden
Monday, August 25, 2025 - 11:40 AM
Authored by Larry Kudlow via RealClearPolitics.com,

If you take a careful look at the decision of a New York appellate court today to throw out the unconstitutional and disgraceful $500 million penalty on President Trump and his businesses…


https://assets.zerohedge.com/s3fs-pu...?itok=EUu3GeiD


And then you keep your nose to the newspapers and watch New York’s attorney general, Letitia James, getting busted for mortgage fraud…
And then you go back a bit and look at all the declassified documents released by Tulsi Gabbard and John Ratcliffe and Kash Patel that show the entire Russiagate hoax was quarterbacked by President Obama and Senator Hillary Clinton…

And then you just think about this whole rotten sequence — what you see is the collapse of the legal and Deep State forces against Mr. Trump.
In many ways, you could argue it’s the collapse of the Democratic Party.

Not only because the Deep State couldn’t bust Mr. Trump, and the forces of treachery and sedition couldn’t break Mr. Trump, and the prominent liars are themselves now facing criminal indictment, and making it all worse for that crowd, Mr. Trump himself was re-elected.
Which was the Obama-Clinton Deep State’s worst nightmare.

And as far as the Deep State goes, it appears that all of those people who participated in the Russian hoax and various other phony trials — well, they’re getting fired from their jobs. And they’re all lawyering up.
And on top of all that, here’s Mr. Trump running a vastly successful administration — in terms of economic policy, domestic policy, foreign policy, you name it.
Wait a minute, though, don’t forget the president is going to inspect Washington, D.C., this evening — so let’s add law and order to that list.
And he closed the wide-open border.

So that adds to the Deep State’s nightmare.
Not only could they not put him in jail for 750 years… Or bust his businesses… Or throw him off the ballot… Or tie him to the so-called Russia hoax…
The worst thing of all for the lawyered-up Deep State crowd, though, is that Mr. Trump is succeeding in virtually every initiative he’s put forward.
And, not to rub it in, but I want to quote Mr. Trump’s Truth Social post today: “a great win for America,” which describes his victory in the New York appellate court.

It’s a great win for America for many different reasons.
What comes to mind to me, though, is that it shows that eventually, the American judicial system works.
As bad, inept, and corrupt as some of these judges and spies have been, with all of their political biases and weaponization and lawfare against Mr. Trump…
As bad as they are, as the cases moved up the judicial totem pole, Mr. Trump has won them all.


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