The BRICS will introduce a payment system based on crypto and blockchain technology.
Specifically, the BRICS consortium is developing a blockchain-based transaction system as part of an annual goal to enhance the presence of BRICS in the international monetary system.
Let’s see below all the details.
Blockchain and crypto: the launch of the BRICS independent payment system
As anticipated, the BRICS countries, consisting of Brazil, Russia, India, China, and South Africa, will be committed to the implementation of a payment system based on crypto and blockchain technology, as reported by the Russian news agency TASS.
The Kremlin assistant, Yury Ushakov, stated in an interview with TASS that the creation of an independent payment system for the BRICS is a crucial goal for the future.
Specifically focused on cutting-edge tools such as digital technologies and blockchain. The important thing is to ensure that the system is convenient for governments, citizens, and businesses, cost-effective, and immune from political interference.
This commitment is part of a specific plan for the current year, aimed at increasing the role of BRICS in the international monetary system.
For some time, the BRICS group has been trying to reduce its dependence on US dollars in settlements, a process known as de-dollarization.
Ushakov has confirmed that work will continue to develop the Agreement on contingent reserves, focusing on the use of currencies other than the US dollar.
Last week, a report from TASS revealed that the Russian Ministry of Finance, the Bank of Russia, and BRICS partners will collaborate in creating the multisided BRICS Bridge payment platform.
This with the aim of improving the global monetary system.
In the month of February, Klaas Knot, president of the Financial Stability Board, wrote to the finance ministers of the Group of 20 (G20) countries highlighting that cryptographic assets, tokenization, and artificial intelligence (AI) remain a priority in the context of the global financial system.
Russia: CBDC at the center of BRICS relations
Recently Russia has declared that it is ready to use central bank digital currencies (CBDC) as a tool to simplify transactions among the BRICS countries.
In an interview with Sputnik, the Russian Minister of Finance, Anton Siluanov, announced that Russia, as the president of the bloc, will promote a system to address the current fragmentation of the “financial, settlement, and payment system.”
Siluanov has proposed the creation of a platform that connects the financial systems of the participants, emphasizing that the technological gateways for the regulations in digital currencies of central banks are already operational.
This system, called “BRICS bridge”, aims to ensure a fair level of equality and promote the development of trade relations between BRICS countries and friendly nations.
The Minister of Finance has indicated that the government is willing to test the system with countries interested in connecting their financial systems to those of the BRICS.
Furthermore, mentioning the possibility of collaborations with China, the neighbors of the Eurasian Economic Union and the countries of the Persian Gulf.
Although Russia is currently testing the digital ruble as a CBDC, with the participation of 30 national financial institutions by the end of this year, Siluanov did not specifically mention the use of the digital ruble in this proposed new system.
On the other hand, China has already launched the digital yuan and is exploring its potential for international settlements through Mbridge.
That is an initiative aimed at connecting the economies of China, Hong Kong, Thailand, and the United Arab Emirates with a common CBDC payment network.
Russia and China explore the Yuan for international loans
The main actors of the BRICS, Russia and China, are seriously considering the option of reducing the use of the American dollar in international loans. In particular, they are choosing to focus on the Chinese yuan as the new reference currency.
The Russian Minister of Finance, Anton Siluanov, is implicitly suggesting a possible transition from the team of American dollars to the team of yuan.
The BRICS team expresses concern about the dominance of the American dollar and is seeking to involve other countries in a plan aimed at strengthening their own currencies.
Russia is ready to accept loans in yuan, but is waiting for approval from China. If this approval comes, it will mark a significant turning point, with billions of dollars not following the usual trajectory in global financial markets.
The goal of the BRICS is to challenge the US dollar by valorizing the yuan and other local currencies.
However, it should be emphasized that nothing is final yet. Siluanov stated that, despite years of discussion with China, there have been no concrete opportunities so far.
Within the broader framework, the BRICS aim to definitively free themselves from dependence on the US dollar. The idea of creating their own currency, similar to the euro, is emerging.
Siluanov believes that this could be a valid alternative to the US dollar, allowing BRICS countries to set prices and parameters without having to depend on the dollar or its central bank.
Currently, these are just rumors. The BRICS group plans to delve deeper into the issue at the next summit in October, trying to develop solid plans that can shake up the current financial status quo.
If they manage to achieve what they are looking for and the world will start to move away from the US dollar, it will be the US economy that will be most affected, with a potential free fall of the United States’ financial dominance on a global scale.