Brazilian Economist Discusses Credit and a New BRICS Currency

Aug. 21, 2023, 2022 (EIRNS)—Brazilian economist Paulo Nogueira Batista, Jr., in a CGTN op-ed posted today, “Is a BRICS Currency Feasible?” went beyond the recently common speculations about “de-dollarization” and a new BRICS currency, to link that issue implicitly to the New Development Bank (NDB), and to the ability of such a BRICS financial institution to issue volumes of productive credit under its new President Dilma Rousseff.

That crucial issue was dealt with by Nogueira Batista—a former NDB vice president and former Brazilian executive director at the IMF—in a paragraph which followed his stating, and clearing away as unworkable, ideas of a new currency which essentially treat it only as a unit of account or a limited means of payment, not as a store of value and not as a credit issuance. Recall that Lyndon LaRouche, in agreement on this point with Alexander Hamilton, many times said that when a government issues a currency, it issues credit and it accepts and assumes a debt.

The new currency would be called the “R5,” after the fact that the BRICS nations’ currencies all start with the letter “R”—real, ruble, rupee, renminbi, and rand. He goes on:

“The only feasible alternative ... would involve making the R5 convertible into bonds guaranteed by the five countries. The R5 Issuing Bank would also be in charge of issuing R5 bonds, denominated in BRICS currency with different maturities and interest rates. The R5 would be freely convertible into R5 bonds. ‘Backed’ by assets created by the Issuing Bank itself, the R5 would actually be a fiduciary currency of the same nature as the dollar and other internationally liquid currencies. The R5 bonds would be the concrete financial expression of the guarantee that the five countries would give to the new currency.”

The idea echoes the Lincoln Administration’s issuance of the Greenback currency. The currency/bonds of such a bank, as they are bought, also become lending reserves of that bank, potentially to be issued as credit to generate “assets created by the Issuing Bank itself.” There are also indications, in today’s statement from the Brazilian Foreign Ministry, that Brazil’s discussions of proposals for the BRICS summit this week—which likely included Brazil’s former President Dilma Rousseff—are echoing as well. She was, in fact, President of Brazil in 2014, hosting the BRICS summit in Fortaleza when it first conceived the idea of the New Development Bank and Contingent Reserve Arrangement.