The BRICS economic group of countries, which comprises Brazil, Russia, India, China and South Africa, have decided to collaborate on a unified payment system based on blockchain and digital technologies.
The purpose of this particular initiative is to increase the role of BRICS in the international monetary system, according to Kremlin aide, Yury Ushakov said on Tuesday. The overall goal of this payment platform is to take steps towards reducing its reliance on U.S. dollars in settlements, which is a process called de-dollarization.
While specific details of the system remain undisclosed, Ushakov suggested that it would incorporate digital currencies, potentially including central bank digital currencies (CBDCs), as Moscow has been working on its digital ruble for some time now. The Kremlin official emphasized the importance of such a system for BRICS, highlighting its potential for cost-effectiveness and impartial operation.
Blockchain technology could actively assist countries in reducing their reliance on the U.S. dollar. It enables direct peer-to-peer trade transactions, cutting out intermediary banks and allowing trade in alternative currencies.
Blockchain-based payment systems also decrease cross-border transaction costs and time, facilitating settlements in various currencies. Countries can issue digital currencies on blockchain platforms, promoting international transactions without traditional banking systems. Additionally, blockchain enhances financial inclusion and transparency, reducing fraud risks.
“We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain,” Ushakov said. “The main thing is to make sure it is convenient for governments, common people and businesses, as well as cost-effective and free of politics.”
Read more: The dark side of the Bitcoin halving: a cryptocurrency roundup
Read more: Marathon Digital Holdings bypasses Bitcoin high transaction scaling issues with Slipstream
Governments have been trying to dethrone the dollar since the 1960s
Foreign governments wanting to liberate themselves from reliance on the U.S. dollar aren’t exactly new. Murmurs in foreign capitals about a desire to dethrone the dollar have been making headlines since the 1960s, but haven’t produced any results.
By one measure, the dollar now dominates 84.3 percent of cross-border trade—compared to just 4.5 percent for the Chinese yuan. And the Kremlin’s habitual use of lies as an instrument of statecraft offers grounds for skepticism about anything Russia says.
There has even been some talk in the previous few months about the five countries collaborating on a unified currency to compete with the dollar, but nothing concrete has come about yet.
Nevertheless, at least based on the economics, the prospects for success of a BRICS-issued currency are new.
Unlike competitors proposed in the past, like the digital yuan, this hypothetical currency could theoretically hold the potential to usurp, or at least shake, the dollar’s place on the throne — especially if it’s a digital currency.
However, whether this blockchain-based payments platform represents an adoption or an abandonment of the original plan for a unified currency is unknown.
Additionally, Russian Finance Minister Anton Siluanov said that for the BRICS countries to develop normally, the organization must consider creating their own financial systems functioning independently of politics and ensuring trade relations between countries.
For several months, Moscow has been advocating for a blockchain-based solution for BRICS, particularly as Western sanctions escalate.
.
