MOSCOW, March 25, Natalya Dembinskaya. The renewed BRICS goes further in expanding payments not pegged to the dollar and US-controlled SWIFT. Our immediate plans include the creation of a blockchain-based international payment system, BRICS Pay. A decentralized multi-currency mechanism will make it possible to bypass Western sanctions, strengthen the economic influence of the international association and accelerate the emergence of a supranational currency. This has already been seen as a direct threat to the American currency.
Bet on blockchain
Eliminating dollar dependence is one of the main goals of BRICS. Rate for settlements and lending in national currencies. Already 95% of trade transactions with China are in rubles and yuan.
This increases solvency and economic resilience to uncertainties and external shocks, says Shen Yi, head of the BRICS Research Center at the Development Research Institute of Fudan University.
«Objectively speaking, the diversified development of the international monetary system and payment systems is in line with the changing trend the distribution of forces and the general direction of evolution of the global system,” he notes.
The next step is our own system of international payments. The other day, Russian Presidential Assistant Yuri Ushakov announced the intention of the BRICS countries to create a payment system based on digital currency technology — blockchain. The task is to develop a modern and effective payment service (pilot name — BRICS Pay), convenient, cost-effective, and most importantly, free from political influence. We need to completely move away from the peg to the dollar and Western instruments like SWIFT.
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The technology that will form the basis of the system is widely used in the crypto industry. Most likely, this will be a common platform of BRICS central banks on the blockchain — through it, the countries included in the organization will be able to pay each other, explains Guzel Protsenko, CEO of Alfa-Forex.
Advantages of the new systems — confidentiality, fast payment processing, low political risks. In addition, this is an effective way to neutralize sanctions.
“A strong alternative to SWIFT was obvious — it is necessary to reduce risks for international banks serving Russian small, medium and large businesses. This is necessary for the security and stability of transfers,” the analyst points out.
Dangerous precedent
The BRICS countries have long wanted to end their dependence on the US currency. Western sanctions against Russia forced action, Forbes notes.
BRICS Pay, along with the development of digital payment platforms within the association, in particular in China, will greatly undermine the position of the dollar on the world stage.
“This is more dangerous for American hegemony than nuclear weapons,” the publication quotes economist Yanis Varoufakis, a former minister finances of Greece.
Experts emphasize: the BRICS payment system really neutralizes the sanctions of the United States and its allies. Vladislav Antonov, financial analyst at BitRiver, highlights the following in this regard.
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Firstly, the BRICS countries and other joining states will be able to carry out mutual payments without going through the dollar. This will weaken its role as the main means of international payments and reserve currency.
Secondly, a decentralized cryptocurrency system on a blockchain is much more difficult to track. This will allow trading with Russia without fear of secondary sanctions.
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Thirdly, BRICS Pay will become a direct competitor to Western-controlled SWIFT. This will strengthen multipolarity in global finance, undermining the dictates of the West and the EU. Finally, the successful launch of its own payment system will strengthen economic integration into BRICS and increase its overall financial and political weight on the world stage. And this is a good incentive for other states to join.
“If this project is implemented, its participants will switch to their own currencies in international payments, without the dollar and SWIFT terminals. At the same time, it is planned that countries outside the bloc will also be able to use the new system. The synergistic effect from such interaction will strengthen the position of BRICS in the global economic system,” says Yaroslav Ostrovsky, specialist in the strategic research department at Total Research.
Of course, setting up the payment system will take time. Experts do not exclude that debugging will take more than one year.
Single currency
Payment a blockchain system can serve as the basis for a future single BRICS supranational currency. And here, certain difficulties are created by the prospects for expanding the association itself and integrating newcomers: among them there are direct strategic opponents.
«This currency must be fully convertible in world transactions. Otherwise, leaders such as China or India, having accumulated through the export of resources and There are enough digital coins to produce, people will ask themselves: what can they buy with them if the West doesn’t recognize them?” — notes Oleg Kalmanovich, chief analyst at Neomarkets.
But be that as it may, all these processes are part of the long journey of the formation of BRICS as a world organization, trade union and financial association.