The BRICS group, an association of Brazil, Russia, India, China, and South Africa, has recently started to propose the idea of providing a cryptocurrency in order to settle payment transactions between the five countries.
RDIF Planning Crypto
The Russian Direct Investment Fund’s (RDIF) CEO, Kirill Dmitriev, has recently informed the public about the plans of the BRICS group to start developing a unified payment system. The wealth fund, totaling in $10 billion, planned on creating the system to facilitate payments between the various countries. The news reported through the RBC Group news outlet stated that Dmitriev floated the idea to the BRICS Business Council who then supported the proposal.
Supporting this, Dmitriev explained that an effective BRICS payment system would encourage settlements through national currencies and guarantee settlement and investment stability between the BRICS countries. Dmitriev said that these payments formed 20% of foreign direct investment’s global influx. Dmitriev himself is a member of the Business Council that supported the idea.
Less USD, More Local Currencies
A matter of note is that the BRICS nations are taking strides to reduce the number of settlements done in USD. Dmitriev noted that the share of foreign trade settlements done in USD has gone down from 92% to 50% over the past five years.
A member of Russia’s State Duma expert council, Nikita Kulikov, explained to RBC that creating a cryptocurrency isn’t difficult in this day and age. However, he stipulated that understanding how the various countries will be ready in its use is paramount. He went further and stated that cryptocurrencies serve as a convenient solution for supranational structures like BRICS. These structures desire an effective way to facilitate settlements between countries.
Three of the five nations within the BRICS group, namely Russia, China, and India, are reportedly searching for an alternative solution to the US-dominated Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. These measures are taken in an attempt to smooth out trade between countries in the midst of US sanctions.
China and Russia are already working to link their respective payment systems together, with Russia’s SPFS expected to be connected with the Chinese CIPS in due time. India is making plans to link the Central Bank of Russia’s payment platform with a payment service that is still in development. The new payment system is apparently intended to act as a “gateway” model. Payment messages would be transcoded according to a specific financial system.
What this means for the future is unknown at the time. Should the BRICS group prove successful in their venture, it would mean that they would take a good deal of financial clout away from the so-called Dollar Domination. The US would suffer through the lack of money working through USD, but that’s only if it works.
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