Abstract
This article explores the potential approaches to optimising the way the institutions of mutual common use by the BRICS countries are constructed. The topic is time-relevant, for it reveals the need to work out a new institutional basis to understand the workings of the BRICS institutions as a result of recent transformations, such as Brexit, in the phenomenon of international and regional economic integration. The article is founded on the hypothesis that the import of institutions by the BRICS may be a more effective approach to the member countries’ convergence than the conventional approach. The originality of the theme lies in the fact that the modern economic literature has not studied to the full extent the impact of this exogenous factor on financial integration. There is also a need for the further development of the least-studied areas of regional monetary integration, namely the lack of the ability of current world institutions to manage the common monetary policies and debt of the member countries. The author proposes principles for creating and operating a virtual contractual republic of the BRICS contrary to the exploitation-state model of the EU. The article rediscovers the institutionalist idea about democratic decisions by a group of subjects such as the member countries of a particular integration agreement. The author maintains that the new institutions of the BRICS may cause dramatic changes in the world monetary system, international liquidity and international reserves. The general conclusions of the article encompass the significance of creating integration institutions on the basis of the experience of the BRICS as a way to more economic and financial stability in the world. The results contribute to the search for opportunities of optimal operation of the BRICS regional debt market. In his closing remarks, the author outlines the prospects of settling the debt problems in the BRICS based on the virtual debt market.
Highlights
10 Frank Schäffler, Nicht mit unserem Geld! Die Krise unseres Geldsystems und die Folgen für uns alle [Not with Our Money! The Crisis in Our Monetary System and the Consequences for All of Us] (Munich: Finanzbuch, 2014). It is purposeless and inefficient for groupings such as the BRICS to work out documents which may lead to the formation of sophisticated monetary or political unions, since a common constitution and law are a standard collection of universal norms and general rules of play that restrict many activities
The BRICS require a general toolkit which will provide the member countries with loans by means of the common virtual debt market. This toolkit is a consensual rate of debt service. It is consensual because the BRICS will have to agree on a mechanism that would help determine the amount of loans demanded and supplied on the market
It can be calculated by means of the free market price mechanism
Summary
A number of dramatic events forced the BRICS countries search for their own path to future development These included socialist revolutions in Russia and China, the decolonisation process in South Africa and India as well as the world financial crisis of the 1930s and the increasing gap between the rich and the poor in Brazil after World War II that persisted all the way up to the late 20th century. It is purposeless and inefficient for groupings such as the BRICS to work out documents which may lead to the formation of sophisticated monetary or political unions, since a common constitution and law are a standard collection of universal norms and general rules of play that restrict many activities These rules and regulations are the basis of the interaction between integrating countries that have very specific, hardly complimentary and hardly converging characteristics in the spheres of politics, economy, society, culture and language. The outcome will be more bureaucratic peculiarities and absurdities, because the people of different countries will not be able to accustom themselves to the arithmetic average of their legislative absurdities plus the absurdities of other nations divided by a certain harmonising denominator created by a group of technocrats who do not understand national differences at all
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