BRICS countries which include Brazil, Russia, India, China and South Africa have proposed to develop a new payment system utilizing blockchain technology and digital currencies. This initiative aligns with their broader strategy of strengthening their position within the global financial system and reducing reliance on the US dollar.
The announcement comes from a recent interview by Russian news agency TASS with Kremlin aide Yury Ushakov. He emphasized the importance of creating a convenient, cost-effective and politically neutral payment platform accessible to governments, businesses, and individuals across BRICS nations.
This move follows a series of efforts by the BRICS group aimed at de-dollarization. In 2023 the Johannesburg Declaration highlighted the goal of increasing settlements in national currencies and bolstering correspondent banking networks. Additionally, the Kremlin aide Ushakov pointed out that the Contingent Reserve Arrangement is being developed to further promote the use of non-US dollar currencies. Ushakov said,
Work will continue to develop the Contingent Reserve Arrangement, primarily regarding the use of currencies different from the US dollar.
The BRICS payment system initiative comes amidst a growing global interest in blockchain technology and digital assets. Last week reports surfaced regarding the creation of the BRICS Bridge multisided payment platform, another effort aimed at enhancing the global monetary system.
In relation to the BRICS Bridge multisided payment platform, the Russian Finance Ministry stated,
The gradual integration of the new BRICS member states into the work of the financial tracks and strengthening of cooperation at the expert level was noted as being one of the crucial tasks for 2024.
Recently, a survey conducted by Ripple and the US Faster Payments Council showed growing interest in blockchain for payments. In this survey, it was revealed that 77% of respondents see advantages like cost savings, security, faster settlements and transparency for various transactions (domestic/cross-border, P2P, C2B, B2B).
The success of the BRICS blockchain-based payment system hinges on overcoming various technical and regulatory hurdles. Nevertheless this initiative signifies a significant step by the BRICS nations towards establishing a more independent financial infrastructure.
