Western finance, especially dominated by the US, has a wide web that includes using the dollar, stocks, bonds, and Treasuries, among other assets, to fund its deficit. While this is a narrow term, the broad term, take for example Treasuries, also includes Treasury bills, Treasury notes, and Treasury bonds, among others. There is an array of US dollar-denominated assets to choose from, and the network is the biggest in the world. Escaping from the US clutches is impossible, but BRICS is now mirroring Western finance with its own financial mechanism.
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BRICS Replacing Western Finance One Step At a Time
BRICS countries are planning to build and mirror Western finance into their payment mechanism. The alliance is looking to create its own payments, currency, settlements, depositories, and swap lines, all outside the US dollar. While the work to achieve the feat is still in progress and could take a tedious amount of time, the risk to the US hegemony is real.
Even if they take a decade or two to get things on track, the US will be the first hit. When the time comes, the US might scramble to get things under control while BRICS readies to mirror Western finance. They are also targeting the US by accumulating tonnes of gold into their reserves for three years.
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They are downplaying paper gold, products like gold exchange-traded funds, sovereign gold bonds, and gold futures, which are mostly regulated by the US and the UK. Speculations are rife that BRICS could back their upcoming currency with gold and challenge Western finance. However, these are not confirmed and remain speculation until the alliance makes it official. Even if they do, the US still leads in gold as it holds roughly 8,100 tonnes. The BRICS bloc has about 5,800 tonnes, and the US outweighs the alliance by 2,300 tonnes of the precious metal.