Within the framework of the de-dollarization efforts being undertaken by the group of countries that make up the BRICS alliance (initially made up of Brazil, Russia, India, China and South Africa), the establishment of a joint payment mechanism – which facilitates international trade – will be one of the key issues to be discussed at the next summit of the regional bloc.
Russia, as the head of the organization, plans to expand economic, political and security cooperation with several countries. To this end, it has invited 36 foreign leaders to the event to be held in the Russian city of Kazan from October 22 to 24. So far, has received the consent of 18 of them.
Preparation for the event is done in a context where 34 countries have expressed interest in joining in a way or other to the group’s activities, such as declares it Russian President Vladimir Putin.
“We cannot ignore the growing interest of many countries in the BRICS,” said the president, assuring that the Summit will discuss the modality of the new category of member states.
This is one of the central themes of the meeting, where emphasis will also be placed on Preparations are being made to launch a payment system that does not use the dollar.
«Active efforts are being made to create a financial payment mechanism to facilitate cooperation among the BRICS countriesmaintaining its sovereign trade and economic exchanges,” said Viktoria Panova, who heads the expert council that oversees the presidency of the organization, currently held by Russia, said:
Panova recently confirmed to Russian media that the issue of international payments It is one of the main points on the agenda“because all members of the group consider it important.”
The issue is vital for the group given the great interest they have in having international payment alternatives with different currencies, in order to be able to challenging the dollar’s global dominance. Therefore, the creation of the payment system has become the top priority.
As BRICS spokesmen report, the financial project is not only heading for its debut at the next summit in 2024, but has a set of allies from Russia, who have already joined a platform that the country launched as an alternative to SWIFT. These are also organizations that are willing to participate in the new payment system that could be launched in the coming months.
«Russia has a financial messaging system whose infrastructure is similar to that of other countries. We have been discussing the interaction of such platforms,» commented At the beginning of the year, the head of the Russian central bank, Elvira Nabiullina.
The official referred to the Financial Transfer Message System (SPFS) created by the Central Bank of Russia in 2014 and in which Central banks participate from Armenia, Belarus, Kazakhstan, Kyrgyzstan and Cuba.
Nabiullina says that since the beginning of the armed conflict with Ukraine (the reason for sanctions against Russia), the number of countries joining the SPFS has been increasing in recent years.
That is why the BRICS urgently need a more complete and updated system, which includes national and digital currencies, along with cryptocurrencies and stablecoins, including gold and other metals, as well as land, tracts of land and other raw materials.
Using all these resources is important for the group considering the increasing volume of cross-border payments between Russia and its BRICS allies. As reported by CriptoNoticias, Deputy Minister of Economic Development Dmitri Volvach estimates that the proportion of payments currently made using only national currencies, is 92%.
Different payment tools will reinforce de-dollarization
There are several payment tools that will probably be introduced at the upcoming BRICS summit. With them, It is intended to launch “a new financial system”, as stated by Andrey Mikhailishin, head of the financial services working group of the bloc’s Business Council.
One of those tools is SPFS, which would be inserted into the supranational payments platform BRICS Bridge, which has been developing since last year.
BRICS Bridge would work in a very similar way to mBridge, the cross-border central bank digital currency (CBDC) project that is among the G20’s goals. “Payments will be made in the national currencies of the BRICS, while the Development Bank will act as an integration, conversion and clearing platform,” Viktoria Panova explained.
To the list of payment platforms of the group A stablecoin is added: the Common Account Unit (Unit), which would be backed by gold. As explained by this medium, the new currency will be linked to an underlying reserve basket composed of 40% gold, and 60% currencies of the member countries of the BRICS bloc. For this reason, the countries of the group have been accumulating tons of gold as part of its strategic reserves.
Added to the previous tools BRICS Paya digital payments platform launched in 2018 by Brazil, Russia, India, China and South Africa (the pioneer members of the BRICS). There is also a payment escrow (Clear), an insurance system (Insurance), as well as a rating alliance.
Mikhailishin notes that with all these tools at hand, the key principles of the new financial system projected by the BRICS will lead to the decentralization of international cooperation and the use of digital technologies.
BRICS advances in its intention to weaken the dollar
As has been pointed out in many publications, the main goal of the BRICS group is to limit or restrict its dependence on the US dollar. This, as a way to evade controls and sanctions from the United States. An objective that seems increasingly closer as all these payment tools advance in their development.
Hence the urgency of the BRICS to launch the new international payment system as soon as possible. They hope to pave the way for participating countries to trade with different types of currencies, facilitating the settlement of payments and reducing the need to use the dollar.
It is expected that as the interest of many countries to join BRICS grows, so will the number of participants in the payment system, joining the global crusade that seeks weaken the dollar as the dominant currency.
