BY EDWARD THEOPHILUS

The International Financial System has been subjected to tremendous changes during the 20^th century, and new currencies such as Euro emerged from time to time, with the support of powerful countries, and after 1930s the system was subjected to ad-hoc changes because some countries attempted to gain trade advantages changing the international value of currencies. The origin of the International Monetary Fund was a result of the financial crisis and this situation considered a major reason for reforms in the system, but when implementing reforms powerful nations gave priority for few developed countries and never considered the case of developing countries. Economic problems were related to currencies in developed countries and the reformists had no mercy for poor countries. In this background poor countries were lamenting without power.

Although common currency emerged such as Euro some countries within the Euro region and countries from outside the Euro region were not allowed to enter the region because it was based on the belief that allowing countries outside the Euro region would negatively impact on Euro. Many developing countries in the Euro region were subjected to harsh conditions, in fact such countries had to follow the conditions insisted by Euro Region dominating Germany and France.  Britain did not agree with the currency policy of EU and it wanted to maintain the prestige of the Sterling Pound and is being continued the use of own currency.

International analysts in Asia have a feeling that BRICS countries in August conference in this year would authorise to initiate new international currency like Euro or to wide use of Yuan (Chinese monetary unit) for international transactions, and the stand of Mr Lula De Silva in Brazil has given a strong challenge to the status of the US Dollar. However, China wants to insist Yuan for the BRICS region that would be challenged to the emerging a new currency unit and this situation seems to be based on international uncertainty and political race among many countries. The independent opinion may be when new currency idea come to light, will the International Financial System go back to a more serious situation than the experience had in 1930s. I haven’t read any opinion expressed by international analysts.

It might be a considerable lost to the prestige of the US Dollar. If it investigates the status of the US Dollar since early 1950s has been subjected to many changes and the association of the US with wars such as Vietnam war, Iraq war and others must have a challenge to the refutation of the dollar. The major advantage to the US Dollar is the disunity among BRICS countries based on various reasons.   

The authority of the Dollar has been considering this situation, but it was failed to manipulate the exactly appropriate policies for other countries because dynamism in the world has positively or negatively influenced the authority of the dollar. Is slavery mentality of the US authority contributed to this situation cannot be imagined by me as an analyst. The conclusions for these points should be made by research findings.  The unexpected changes in financial, trade and social thinking also would have contributed to the dynamism and they highly qualitative factors than quantitative. The other vital point that has been influenced was the US authority had to deal with friendly countries respecting the views of such countries before taking policy decisions, and such consultation must have leaked the aims of the US authority to outside world, and gave an opportunity to manipulate policy reactions against the US authority.  It is the nature of this world; nothing can be stable or take policy decisions secretly, and nobody can manipulate any policy that would be stable to work with dynamism, and only God can do such a creation. It needs to consider that the nature of this planet is changing in terms of the evolution theory and in such a situation, could the US dollar stay like God is a question and people need to understand the point in relation to the currency crisis in the modern era.

As expressed by Indian analysts Bricks countries have statistical power on various areas such as population, market factors and many directions and it couldn’t underestimate the power of the BRICS but it might support to changes and it doesn’t mean BRICKS could construct a system that maintain the stability. The major issue in BRICKS countries is they have a higher income disparity in population that might difficult to take to a positive agreement within own population. The other significant point is BRICKS also like the non-align movement may loss its influencing power during the operation of several decades.

The stability of a new international currency would be dependent on the trust of people, for example at the beginning EURO had issues related to the trust of public and such issues had been removed by the improving the trust of people and the agreement of EEC operational conditions. The issue here is could BRICS countries develop an environment like EEC had.   BRICS countries have no a good welfare system for poor people within countries and People in the world have no idea what they are doing for poor.