Brazilian Economist Interviewed on the NDB Before BRICS Summit
Oct.6—Brazilian economist Paulo Nogueira Batista, Jr. gave an interview to RT Oct. 2 on the upcoming BRICS summit Oct. 22–24 and potential alternatives to the use of the dollar in trade and investment. Nogueira was Vice-President of the New Development Bank (NDB) at its founding in 2015, and also formerly Brazil’s Executive Director at the IMF. He kept his answers brief and general for the most part, perhaps due to the sensitivity to disruption of the BRICS “currency” discussions now ongoing ahead of the upcoming conference in Kazan. He, however, made the following main points:
Payment in national currencies is growing fairly rapidly, and is good, but limited in its effect—it is more critical that BRICS and BRICS partners develop a new "reserve currency." [Note: This is a currency held in central banks for currency swaps between central banks and for use to settle trade imbalances in national account; here the former IMF official is imagining the creation of something that would facilitate the relation of the NDB to the existing central bank-dominated financial system, treating the NDB like it was a central bank. Sources report that within the BRICS this is but one proposal of several on the new currency; there is another that proposes to create a currency that would be used in trade both within the BRICS nations and externally for development projects. This trading currency could bypass, if necessary, dollar denominated trade and would be convertible into sovereign currency, at fixed rates of exchange. Its value would be secured by a combination of the value of the physical assets created and by a market basket of commodities, further supported by the reserves of currencies and gold held by the NDB. This is more in line with seeing the NDB as a "national bank," in the tradition of Hamiltonian national banking for the collective general welfare of the BRICS nations. not in any way like the privately run central banks.]
According to Nogueira, his proposed reserve currency does not mean a “single currency” replacing national currencies, but an alternative reserve currency “for international transactions.”
It will be difficult to do this, he says. For example, will India agree? The U.S. dollar is a “weaponized, militarized” currency, which is weakening it. However, the United States absolutely insists on its use as the sole reserve currency, employing financial attacks on other nations, as well as military power and threats.
Nogueira did not explicitly link the NDB to the creation of the needed new reserve currency—as he did in his interview at the Johannesburg BRICS summit in August 2023—but it was implied. He criticized the NDB for remaining primarily dollar-based in its own banking operations.
Behind the scenes, sources report, there is major disagreement on how far the BRICS nations at this moment are willing to push the idea that what they are creating is actually an alternative to the existing, bankrupt financial system, or merely trying to represent their system as one that would co-exist within the existing system. The Chinese, including President Xi Jinping, have repeatedly said that the emerging BRICS system is not competing with or a threat to the existing system.
“The Chinese have a great stake in the existing IMF-World Bank system,” said the source, “there is also the question of the relationship of Hong Kong and Shanghai to the system. Their view is that you can create a trading block, with a special credit facility—the NDB—to fund the type of development projects that are involved with the Belt and Road Initiative that are not really sustainable with credit from China alone and which are, by its charter, too large to be funded by the World Bank, which is really a non-entity for such development.
“The Chinese view is to create a credit facility and payments settlement capability, with an idea that might eventually evolve into something that could replace the unworkable system as it exists now,” said the source. “They are totally opposed to using the BRICS system to wage a war against the existing system. That is why they have placed bankers with ties to the IMF in charge of the NDB.
Russian President Vladimir Putin’s principal economic advisor on these matters Sergey Glazyev is critical of such a view—a view also shared by the Russian Central Bank, which he says will ultimately threaten the operation of the BRICS’ most important creation, the NDB. In his eyes, there is too much attention being paid to the monetary aspects of policy, including the settlements issue and the creation of a new trading currency.
Glazyev believes that the monetary arrangements must be governed by the demands of physical economic development and related trade, and nothing else. It is to facilitate such trade and related physical economic development that the new trading currency will be created. That will require some kind of structure, perhaps within the NDB, to do what the IMF should be doing: rebalance the imbalance in trade, as related to each sovereign nation and its currency.Glazyev is outspoken critic of the IMF as it now functions, lending money from its reserves to countries that are in potential default to private banks, and then imposing austerity conditions on these sovereign governments in exchange for such loans, something that is outside the domain of the IMF charter.
“Glazyev wants to change the entire global system,” said the source. “He believes to be financially and morally bankrupt. He does not want to tinker with it, or make it more representative, by adding more nations from the Global South to its governing bodies. He sees in the BRICS a workshop to create the kind of system he wants. What makes him dangerous is that he has Putin’ ear and may have the ears of other people within the BRICS leadership, including people around Xi. His thinking is even more dangerous, because it is informed by the policies and teachings of the late American physical economist and statesman Lyndon LaRouche [1922–2019], whom he has called his mentor, and who laid the plan for a replacement to decayed Bretton Woods system and its floating exchange rate speculative casino some 50 years ago with his proposal for an International Development Bank (IDB).
“Galzyev knows, like LaRouche knew” the source stated, “that these two systems can’t coexist. The Central Bankers will move to crush the BRICS, as they are already doing with wars, even a nuclear war. Why no risk that? If they lose control of the global system, they are finished anyway. Après moi, le déluge. [“After me, the flood”] Right? But I am told that the BRICS are conflicted, and there is no consensus on a plan.
“I expect that the BRICS will not announce a plan for a new trading currency at their Oct. 22-24 meeting, but it may come next year. The real battle, right now, needs to be on upping the NDB’s capitalization, ramping it up to more than a trillion dollars equivalent. The NDB needs to get some of the big boys, like China, the Saudis, and others to increase their deposit levels, so that the bank can be used to support the required greatly increased amount of lending. Something like that is under discussion.”
The most important immediate working item for the BRICS finance ministers meeting on Oct. 11, and similar experts’ and officials’ meetings around the Kazan BRICS summit Oct. 22–24, is a new system for settling trade imbalances among BRICS and BRICS partner nations.