Analyzed by Dr. Ahmed Mostafa
19 Countries Enter Advanced Stages of CBDC Testing
As confirmed by the International Monetary Fund (IMF). Among these nations Nineteen countries are currently in the advanced stages of testing Central Bank Digital Currencies (CBDCs), the United Arab Emirates (UAE), a newly inducted member of BRICS, is also progressing in its CBDC testing.
In addition to the UAE, countries in the Middle East such as Bahrain and Saudi Arabia are advancing in their CBDC testing. Georgia and Kazakhstan have moved to the advanced stage of ‘proof-of-concept’ after successfully conducting two pilot CBDC programs, according to the IMF.
The BRICS alliance is exploring the possibility of launching a new CBDC currency for facilitating cross-border transactions. The alliance’s goal is to reduce reliance on the US dollar by promoting the use of CBDCs or local currencies in global trade and commerce.
CBDC’s Will Boost Financial Inclusion in the Middle East, Says IMF
The International Monetary Fund (IMF) has verified that Central Bank Digital Currencies (CBDCs) have the potential to enhance financial inclusion and payment efficiency within BRICS nations. Furthermore, countries in the Middle East could also experience benefits from this advancement, leading to substantial growth in the financial sector. According to the IMF, 19 countries, such as Bahrain, Georgia, Saudi Arabia, and the United Arab Emirates (a BRICS member), are currently in the advanced ‘proof-of-concept’ stage, with Kazakhstan taking the lead after successfully completing two pilot programs.
The IMF also highlighted that CBDCs could play a crucial role in enhancing the efficiency of cross-border payment services. This is particularly significant for oil-exporting countries and members of the Gulf Cooperation Council, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (a BRICS member). The complexities associated with cross-border payments, such as varying data formats, operating rules across regions, and intricate compliance checks, often result in high transaction costs. By addressing these inefficiencies, CBDCs have the potential to significantly reduce transaction costs, as stated by the IMF.
When will we hear about the digitization of the Egyptian pound?
BRICS: India Looks To Reject New Memberships in 2024
BRICS welcomed six new countries last year, with only four agreeing to join the bloc. The United Arab Emirates, Egypt, Iran, and Ethiopia became members, while Argentina declined the offer. Saudi Arabia is still undecided on joining and is currently evaluating its options. India, an existing BRICS member, appears dissatisfied with the recent expansion and is considering rejecting future invitations in 2024.
Russia and China are planning to extend invitations to additional countries during the 2024 summit, aiming to strengthen the alliance as a counterbalance to the US, Europe, and other Western nations. India is concerned that China and Russia may be using BRICS for their own nationalistic agendas. China and Russia are using BRICS as a shield to retaliate against the US, which has raised suspicions in India.
As a result, India may oppose further expansion plans during the upcoming 2024 summit. India is advocating for a five-year gap before admitting a second group of countries into BRICS, believing that this time frame is necessary for the bloc to adjust to the recent additions. This sentiment has been expressed in recent high-level meetings and discussions among officials.
JP Morgan Predicts Huge US Stock Market Crash
Leading global investment bank JP Morgan has predicted a major US stock market crash. The bank remains cautious on the S&P 500 index noting that a 20% downside could be on the cards. JP Morgan’s doomsday stock market prediction comes when BRICS is looking to uproot the dollar and damage the US economy.
The US economy will lead to its own undoing with BRICS having little to bring it down, according to JP Morgan. The banking firm noted that the largest 20 US stocks have surged more than 27% in value year-to-date (YTD). The stocks have outperformed the S&P 500 index which surged nearly 16% YTD. The top 20 US stocks also outpaced the Russell 2000 which is up only 1.73% YTD.
JP Morgan has forecasted that a major correction could hit the top 20 US stocks making the markets tank. It warned that the S&P 500 index could crash to a low of 4,200, a drastic decline of 23%. If the US stock market dips 23% according to JP Morgan, BRICS currencies will gain strength in the forex markets.
While the US stock market will look at ways to stop the crash, BRICS could cause further damage by cutting ties with the dollar. JP Morgan’s bearish forecast for the US stock market is bullish for BRICS as it wants to pull the dollar down.
The weakening of the US dollar is a boon to BRICS which wants to push local currencies ahead for trade. JP Morgan has already warned that the US dollar could dip in the next few decades and BRICS could make the most out of the decline.
Major U.S. Sector To Be Affected If BRICS Ditches the Dollar
The BRICS alliance plans to launch a gold-backed currency to replace the US dollar, with the goal of creating a multipolar financial world where developing countries have limited connections to the dollar. Global trade will primarily be settled in the new BRICS gold-backed currency or local currencies of other developing countries, helping them protect their native economies. The growing debt in the US reached $34.4 trillion this month, and developing nations want to distance themselves from the dollar.
The main U.S. sector to be affected by BRICS de-dollarization is the banking and finance sector, as banks across America will be forced to take measures to protect the U.S. dollar. New currency pairs could also take center stage in the forex market, adding more pressure on the U.S. dollar.
The financial sector, which includes consumer goods, retail, technology, and fintech, will also be affected, as inflation could hit the U.S. homeland, causing prices of everyday essentials to peak. The BRICS alliance’s departure from the dollar for global trade and transactions will have adverse effects on the U.S. economy and day-to-day life in America.
An overlap between SCO summit agenda in Astana yesterday and BRICS in several cases and files
The Shanghai Cooperation Organization (SCO) summit in Astana, Kazakhstan, emphasized the importance of economic cooperation among its member states. The SCO, consisting of China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan, Iran and Uzbekistan, was established in 2001 to promote regional cooperation and security. Meanwhile, the BRICS nations, comprising Brazil, Russia, India, China, and South Africa, aim to deepen cooperation and coordinate on international issues.
The SCO summit emphasized the need to strengthen trade and investment ties, expand cooperation in energy, transportation, and infrastructure, and promote small and medium-sized enterprises (SMEs) and entrepreneurship. Similarly, the BRICS nations are focusing on enhancing economic cooperation through mechanisms like the New Development Bank, Contingent Reserve Arrangement, and BRICS Partnership on New Industrial Revolution.
The Security Cooperation and Cooperation Council (SCO) and the BRICS nations share common ground in security cooperation. At the SCO summit, leaders discussed the challenges of terrorism, extremism, and separatism in the region, emphasizing the need for cooperation and regional stability. They also emphasized the importance of confidence-building measures and dialogues to combat non-traditional security threats.
The BRICS nations also emphasized multilateralism, upholding the principles of the United Nations Charter, promoting peaceful dispute resolution, and strengthening regional organizations’ role in global governance. They advocated for a more equitable international order, focusing on the representation of emerging economies in international institutions.
The Shanghai Cooperation Organization (SCO) and the BRICS agendas overlap in specific areas, such as promoting connectivity and infrastructure development in the Central and West Asian regions, addressing climate change, environmental degradation, and pandemics, and expanding its membership.
The SCO, which includes China, Russia, Iran, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, has been actively seeking to increase its influence and reach in the region. One of the primary goals of the summit was to strengthen its relationship with Belarus, a close ally of Russia, and eventually grant it full membership. Belarus is seen as an important partner in the SCO’s efforts to counter the influence of NATO and the USA in Central and West Asia.
The SCO summit emphasized the Palestinian cause and its right to self-determination, calling for a fair solution to the Israeli-Palestinian conflict based on international law and UN resolutions. It also emphasized the need to prevent colored revolutions like those in Ukraine and Kazakhstan from affecting regional stability and security, urging NATO and the USA to close the door before these events in Central and West Asia. The SCO is committed to taking steps to prevent such events.
