At the Valdai Discussion Club Plenary Q&A session on Oct. 5, Russian President Vladimir Putin was asked about the discussion underway in the BRICS about “the possible structure of the (new) global monetary economic system?”
Putin began by slamming the debt looting carried out under the current system. “At the Russia-Africa Summit, our African colleagues and friends said that the loan burden of the African states is over one trillion US dollars. It is impossible to repay these debts, it will never be done.… It is not normal when such a situation happens, and something needs to change. The Bretton Woods system was created based on the dollar, but it is gradually falling apart. Because a currency is a derivative of the country’s economy which issues that currency.”
Putin continued: “But as far as BRICS is concerned, we not only need to create a single currency, but also build a settlement system and create financial logistics to provide for settlements between our states. We also need to transition to settlements in our national currencies, keeping an eye on them to understand what is actually occurring with them, while taking into account the macroeconomic indices of our economies, exchange rate differences, and inflation processes. It is not an easy situation, but it can be dealt with, and this is what we need to do.
“Yesterday, we discussed this with our experts, including the possibility of creating a single BRICS currency. Theoretically speaking, yes, it is probable. But in order to begin working on this, we need to achieve a certain parity in the development of the economies of the member states, which is a very distant perspective.”
Putin then warned against the Euro model, in which national currencies in the 19 countries of the Eurozone disappeared in favor of a single currency: “As my colleagues told me, in the course of time, the Eurozone transitioned to the common currency, the euro, without thinking about how it would work in countries with a different level of economic development, and problems emerged. Why would we make the same mistake? This issue is not even on the agenda. But we should and we will work to improve the entire financial system, both global finance and financial relations within BRICS.”
