BRICS Set to Launch Blockchain-Based Payment System to Reduce Dependency on US Dollar
The global intergovernmental organization BRICS, consisting of Brazil, Russia, India, China, and South Africa, is gearing up for the launch of a cross-border payment system based on digital currencies and blockchain technology. The group is looking for alternatives to the United States dollar as the primary currency in international trade.
According to official Yury Ushakov, BRICS believes that creating an independent payment system is crucial for the future, utilizing cutting-edge tools such as digital technologies and blockchain. While the specifics of the payment system are not yet disclosed, it is speculated that the system will leverage central bank digital currencies (CBDCs) to facilitate trade.
Several BRICS member states are actively exploring CBDCs, with China leading the way with the digital yuan. India and Brazil are also making strides in their CBDC experiments, with India collaborating with commercial banks and Brazil conducting successful pilot programs.
In addition to CBDCs, there are rumors that the BRICS system may incorporate stablecoins for settlement as part of its de-dollarization efforts. Russia, in particular, has shown interest in stablecoins for cross-border transactions.
The move towards a blockchain-based payment system comes alongside the Contingent Reserve Arrangement (CRA), which aims to use local currencies as an alternative to the US dollar to protect against global liquidity pressures.
The recent economic sanctions imposed on Russia following its invasion of Ukraine have accelerated the push for alternative payment systems. Russian authorities have turned to digital currencies as a way to circumvent sanctions, leading to plans for the BRICS Bridge system for international settlements.
As Finance Minister Anton Siluanov stated, the transformation towards alternative payment systems is challenging but necessary to counter Western economic powers’ restrictions and sanctions. The BRICS initiative aims to level the playing field and reduce dependency on the US dollar in international trade.
With the launch of the blockchain-based payment system on the horizon, BRICS is poised to make significant strides in reshaping the global financial landscape and reducing reliance on traditional currencies.
