The key to Political Sovereignty is Currency Sovereignty

“Woe to those who give less [than due], who, when they take a measure from people, take in full.
But if they give by measure or by weight to them, they cause loss.”
Surah Al-Mutaffifin, 83:1-3

This verse condemns dishonest practices in trade, particularly giving less than what is due, which is a form of economic exploitation.

Core Principles of Modern Monetary Theory (MMT)

1. Currency Sovereignty
   • MMT applies to countries that issue their own sovereign currency (like the U.S. issuing dollars, Japan issuing yen). A sovereign government that controls its own currency can never “run out” of money because it can always issue more to meet its obligations.
2. Government Spending Drives the Economy
   • Government spending creates money in the economy, while taxation removes money. Taxes are not needed to fund spending but are a tool to control inflation and demand.
3. Full Employment is the Goal
   • MMT advocates for a Job Guarantee Program where the government acts as an employer of last resort to achieve full employment and reduce economic inequality.
4. Deficits are Not Inherently Bad
   • Budget deficits are viewed as a natural outcome of government spending. Rather than focusing on balancing budgets, MMT focuses on balancing the economy by ensuring productive capacity and full employment.
5. Inflation is the Key Constraint
   • The only real limit on government spending is inflation, not deficits or debt. MMT suggests managing inflation through taxation, regulation, or reducing demand.

MMT’s Approach to Debt in Foreign Currencies

1. Foreign Currency Debt is a Risk
   • MMT acknowledges that debt in foreign currencies is a significant risk for governments. Unlike debt in a sovereign currency, foreign debt must be repaid in a currency the government does not control, making default possible.
2. Foreign Reserves Management
   • Governments need sufficient foreign currency reserves to service foreign debt. This often requires maintaining a positive trade balance to earn foreign currency.
3. Avoidance of Foreign Debt
   • MMT advocates that countries should minimize borrowing in foreign currencies. Instead, they should aim to strengthen their domestic currency through economic policies that enhance productivity and reduce reliance on imports.
4. Currency Devaluation Risk
   • If a country has significant foreign debt and its currency depreciates, the cost of repaying that debt increases. MMT emphasizes maintaining policies that stabilize the domestic currency and reduce reliance on foreign loans.

Core Principles of the BRICS International Messaging Solution (BIMS)

1. Financial Sovereignty
   • The BIMS is designed to reduce dependence on Western-controlled financial systems like SWIFT. It ensures that BRICS countries can conduct cross-border transactions without external interference.
2. Resilience Against Sanctions
   • One of the primary goals of BIMS is to safeguard member countries from the impact of sanctions, especially those imposed by Western powers, by providing an independent payment messaging infrastructure.
3. Cost-Effective and Efficient Transactions
   • BIMS aims to provide a cheaper, faster, and more secure messaging service for international financial transactions compared to SWIFT, facilitating smoother trade and investment flows between BRICS countries.
4. Interoperability with Domestic Systems
   • The system is designed to integrate with domestic payment infrastructures in member countries, such as Russia’s SPFS (System for Transfer of Financial Messages) and China’s CIPS (Cross-Border Interbank Payment System).
5. Promotes De-Dollarization
   • BIMS supports the BRICS countries’ broader agenda of reducing reliance on the U.S. dollar in international trade by promoting the use of local currencies for transactions.

Core Principles of the BRICS Bank (New Development Bank – NDB)

1. Promoting Development and Infrastructure
   • The primary objective of the NDB is to finance infrastructure and sustainable development projects, especially in developing countries, to bridge the global infrastructure gap.
2. Multilateral Cooperation
   • The NDB embodies the principle of equal partnership among its members. Each founding member country has an equal voting share, ensuring no single country dominates decision-making.
3. Local Currency Lending
   • The NDB prioritizes lending in local currencies to reduce the risk of exchange rate fluctuations and promote financial stability in borrower countries.
4. Sustainability Focus
   • The bank emphasizes funding projects that align with sustainable development goals (SDGs), such as renewable energy, water management, and urban development.
5. Diversified Membership
   • Initially established by the five BRICS countries, the NDB has expanded its membership to include other emerging economies. This diversification enhances its global reach and influence.
6. Complementary to Existing Institutions
   • The NDB aims to complement, rather than compete with, existing global financial institutions like the World Bank and IMF, offering more equitable terms for borrowing countries.

Proposed Solutions for Managing Positive Trade Balances between Nations

1. Promoting Local Currency Lending
   • Solution: The NDB offers loans in local currencies (e.g., the Chinese yuan, Indian rupee, Brazilian real) rather than foreign currencies like the U.S. dollar. This reduces the need for BRICS countries to hold large reserves in foreign currencies, especially if they are running trade surpluses.
   • Impact: The use of local currencies for trade and investments means that positive trade balances no longer lead to an accumulation of foreign reserves that could distort the domestic economy.
   • Example: If a country experiences a trade surplus, it can use the reserves to secure NDB loans in local currency for infrastructure, sustainable development, or industrialization, rather than accumulating more foreign currency.
2. Supporting Regional Investments and Development
   • Solution: The NDB channels funds into infrastructure, energy, and sustainable development projects within BRICS countries and other emerging economies. This helps convert trade surpluses into long-term investments in the real economy rather than financial assets.
   • Impact: By financing regional projects that require significant capital investments, the NDB helps ensure that trade surpluses are reinvested back into productive assets that stimulate growth across member nations.
   • Example: A region with a trade surplus can use its surplus for regional infrastructure development funded by the NDB, thereby addressing potential negative economic impacts like inflation or an over-appreciating currency.
3. Facilitating Trade and Investment in BRICS Nations
   • Solution: The NDB can help facilitate cross-border trade and regional investment by providing financial backing for projects that strengthen the economic ties between BRICS nations.
   • Impact: This helps diversify trade flows and investment channels, reducing dependence on specific foreign markets (like the U.S. or Europe), which are often the destination for trade surpluses.
   • Example: By investing in energy, trade, and infrastructure projects within other BRICS countries, the NDB can help redirect trade surpluses into multilateral economic projects, fostering more balanced intra-BRICS trade and development.
4. Managing Currency Stability and De-dollarization
   • Solution: Through regional lending and investments, the NDB supports de-dollarization (reducing reliance on the U.S. dollar in trade) and helps mitigate currency fluctuations caused by the accumulation of foreign reserves.
   • Impact: De-dollarization helps reduce the impact of foreign currency volatility, especially when countries accumulate large positive trade balances in currencies like the U.S. dollar. This allows BRICS economies to stabilize their exchange rates and improve monetary control.
   • Example: A positive trade balance with countries outside BRICS (like the U.S.) would traditionally result in more dollar reserves. With the NDB’s role in supporting local currency loans and projects, the need for dollar accumulation is reduced.