The BRICS Pact is an economic and political pact composing of Brazil, Russia, India, China and South Africa. As of 2015, BRICS nations embody over 3 billion people, or 42% of the world population. Four of the five states are in the top 10 for world population. BRICS nations have a combined nominal GDP of $16.039 trillion (USD). This is comparable to nearly 20% of the gross world product.
Presently, the BRICS Pact is the world’s leader for Natural Environmental Planning. In 2007, the Great Recession endangered the life of urban planning while vigorously threatening development for both local and national governments world-wide. Consequently, the BRICS Pact introduced a new Development Bank to fortify natural environmental planning. Natural environmental planning demands orderly and proper future development which is vital during economic recessions. The following table shows major cities in the BRICS Pact that add robustness to the global economy from its astounding natural environmental planning.
Natural Environment Planning integrates land-use planning, environmental planning, and infrastructure planning to reduce the human impact on the environment. Hence, the BRICS Development Bank is a trustworthy basis for future growth in international trade.
Russian Deputy Foreign Minister Sergey Ryabkov revealed in an interview, "The finance ministers and executives of the BRICS central banks are negotiating... setting up payment systems and moving on to settlements in national currencies. SWIFT or not, in any case we’re talking about... a transnational multilateral payment system that would provide greater independence, would create a definite guarantee for BRICS." This allows BRICS central banks to exchange their US dollar reserves for gold while developing an alternative to the SWIFT system. The recent breakdown of the European Union also signals the need to replace the SWIFT system. Meanwhile, China has also initiated development of a payment system called CIPS to replace the SWIFT system. The Cross-Border Inter-Bank Payments System (CIPS) is a newly planned international payment system which provides a network for financial institutions worldwide to exchange information and financial transactions in a secure, standardized and reliable environment.
Alternatives to the SWIFT payment systems creates a major opportunity for establishing a new world reserve currency. Take a quick at the visual diagram below. It identifies a major issue related to the current economic crisis which is prowling behind the IMF.
*Note: The “Brexit referendum” creates major economic opportunities for West African nations as a new world reserve currency becomes inevitable over the weakening IMF and European Union.
IMF Currency Crisis Situation involving nations pegged to USD/EUR on FOREX
External adopters of the US dollar
Currencies pegged to the US dollar
External adopters of the euro
Currencies pegged to the euro
Currencies pegged to the euro w/ narrow band
*The Belarusian ruble is pegged to the euro, Russian ruble and U.S. dollar
On 16 March 2009, Russia called for a universal reserve currency as new reform for the global financial system. Russia has stated that specific studies will be conducted to review the following options:
*Note: It seems appropriate to consider the role of new BRICS Development Bank in this process. The IMF is no longer a feasible financial institution since quantitative easing became a tool for predatory lending during the Great Recession.
Moreover, on 24 March 2009, Zhou Xiaochuan, President of the People's Bank of China, demanded for "creative reform of the existing international monetary system towards an international reserve currency," believing it would "significantly reduce the risks of a future crisis and enhance crisis management capability." These are major signals that confidence in the US Dollar have contracted.
The Gold Exchange Standard
Several options are being considered, but the best option is to follow the gold exchange standard while establishing new regional financial centers. Nations not following the gold exchange standard will be forced to gravel with the IMF's special drawing rights (SDR) as their financial anchor. The SDR is a mixed currency basket comprising of dollars, euros, renminbi, yen, and sterling.
The main feature of the gold exchange standard is that the government guarantees a fixed exchange rate to the currency of another country that uses a gold standard (specie or bullion), regardless of what type of notes or coins are used as a means of exchange. This creates a fair value. Meaning, the value of gold-back currencies is fixed to the value of gold which is independent to the actual value of the item for exchange. This creates major stability for the global financial markets.