Asian countries that participate in the non-dollar international payments system mBridge, are all hoarding gold and have been largely responsible for the bull market of the past two years.
this has been in planning for many years. the BRICS countries will reveal other key components as needed, to make this work, I presume. also neccessity is forcing this evolutionary change as they recognise the present system is approaching its sell by date.
There are a couple of things about this that still don't make that much sense. first, if all the nations in the mBridge network are C/A surplus countries, who is taking the other side of their stuff. One of the ironies of the US dollar system is that it requires the US to run massive deficits in order to supply the dollars needed elsewhere in the world. with the US out of this particular picture, who is providing the demand?
second, and you mentioned in passing at the end, the $75 trillion in Eurodollar assets and liabilities that are outstanding seem unlikely to be abandoned completely.
Finally, especially if Trump wins, it seems entirely possible that there will be a significant increase in oil/energy production in the US, driving prices down and severely negatively impacting Saudi Arabia and the UAE and their surpluses and domestic budgets and economies.
One other thing, who is setting the FX rate when cross-border from THB - SAR transactions are taking place? and who is taking on the opposing risk?
I don't doubt that many nations want to rely less on the dollar, but given the evolution of the global economy, especially the fact that it is largely a debt driven economy around the world, and the only truly liquid markets are USD markets, are those members of mBridge willing to sacrifice economic activity on this alter? It is not a slam dunk in my mind
No it's not a slam dunk. The current account deficit countries are not with the mBridge members. Within mBridge they will try to have balanced current account accounts with each other - but time will tell if that succeeds. Any imbalances could be settled in gold in the future (that's not what happening now), just like imbalances mBridge countries can have with non-mBridge countries.
Sacrificing economic activity is easy when the alternative is being sanctioned.
There is a lot of speculation on possibility that BRICS could introduce a financial transaction alternative in their Kazan summit next month. I suspect they may propose a system similar to mBridge, hopefully without involvement of BIS.
this has been in planning for many years. the BRICS countries will reveal other key components as needed, to make this work, I presume. also neccessity is forcing this evolutionary change as they recognise the present system is approaching its sell by date.
There are a couple of things about this that still don't make that much sense. first, if all the nations in the mBridge network are C/A surplus countries, who is taking the other side of their stuff. One of the ironies of the US dollar system is that it requires the US to run massive deficits in order to supply the dollars needed elsewhere in the world. with the US out of this particular picture, who is providing the demand?
second, and you mentioned in passing at the end, the $75 trillion in Eurodollar assets and liabilities that are outstanding seem unlikely to be abandoned completely.
Finally, especially if Trump wins, it seems entirely possible that there will be a significant increase in oil/energy production in the US, driving prices down and severely negatively impacting Saudi Arabia and the UAE and their surpluses and domestic budgets and economies.
One other thing, who is setting the FX rate when cross-border from THB - SAR transactions are taking place? and who is taking on the opposing risk?
I don't doubt that many nations want to rely less on the dollar, but given the evolution of the global economy, especially the fact that it is largely a debt driven economy around the world, and the only truly liquid markets are USD markets, are those members of mBridge willing to sacrifice economic activity on this alter? It is not a slam dunk in my mind
No it's not a slam dunk. The current account deficit countries are not with the mBridge members. Within mBridge they will try to have balanced current account accounts with each other - but time will tell if that succeeds. Any imbalances could be settled in gold in the future (that's not what happening now), just like imbalances mBridge countries can have with non-mBridge countries.
Sacrificing economic activity is easy when the alternative is being sanctioned.
There is a lot of speculation on possibility that BRICS could introduce a financial transaction alternative in their Kazan summit next month. I suspect they may propose a system similar to mBridge, hopefully without involvement of BIS.