The BRICS group of emerging economies, comprising Brazil, Russia, India, China, and South Africa, has announced its intention to create a payment infrastructure based on digital currencies and blockchain technology.
The initiative is part of the group’s efforts to increase its role in the international monetary system and reduce its dependence on the US dollar.
According to Kremlin aide Yury Ushakov, the BRICS payment system will be an important goal for the future, which will be based on state-of-the-art tools such as digital technologies and blockchain.
He said that the system would be convenient, cost-effective, and politically neutral for governments, common people, and businesses
The BRICS payment system will also involve the development of the Contingent Reserve Arrangement, which is a mechanism that allows the BRICS countries to provide mutual financial support in case of balance of payments difficulties.
Ushakov said that the work will continue to use currencies different from the US dollar, such as the Chinese yuan, the Russian ruble, or the Indian rupee.
The BRICS group has been working on enhancing its financial cooperation and de-dollarization for some time.
In 2023, the group issued the Johannesburg Declaration, which stated that the BRICS countries need to increase settlements in national currencies and strengthen their correspondent banking networks to secure international transactions.
In addition, the BRICS group has been exploring the potential of blockchain and digital currencies for various purposes.
For instance, Russia’s Finance Ministry, the Bank of Russia, and several BRICS partners are working to create the BRICS Bridge multisided payment platform, which will facilitate cross-border payments and remittances among the BRICS countries.
The BRICS group is not the only one that is interested in blockchain and digital currencies as a way to improve the global monetary system.
The Financial Stability Board, which monitors the global financial system, has also identified crypto assets, tokenization, and artificial intelligence as priorities for the future.
The group’s announcement of creating a payment system based on digital currencies and blockchain technology is a significant step towards leveraging the potential of web3 technologies for a more inclusive, efficient, and resilient global financial system.
The initiative could also have implications for the geopolitical balance of power and the future of the US dollar as the dominant reserve currency.
