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Last updated on October 25th, 2024 at 04:29 pm
Russia will be placing fundamental changes in the payment system in the BRICS countries, a new BRICS payment system to further the process of De-Dollarization bypassing the global financial system presently dominated by the US dollar.
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The important move comes as part of Moscow’s attempts to drastically limit the impact of sanctions imposed by US – Washington, NATO, and their allies.
[Also Read: How Is the Indian UPI Leading to USD De-Dollarization? Analyse The Secret Now]
Russia’s Proposal For New BRICS Payment System For US Dollar Demonetization
Russia is to propose developing a network of commercial banks that will allow transactions to be conducted in local currencies, and simultaneously establish direct links between central banks in all the member states.
A “multi-currency system” should aim to “immunize all the participants against any external pressures including external sanctions.” as per a report by the Russian Ministry of Finance, the Central Bank of Russia, and a consulting firm named Akov & Partners.
[Also Read: BRICS Pay News: A New Era of Financial Cooperation]
This proposal includes establishing centers for mutual trade in commodities such as oil, natural gas, grains and gold to strengthen economic cooperation among the countries of the group.
Tough sanctions have been imposed on Russia by the United States and its allies, which include the freezing of Russian assets and expelling Russian banks from the SWIFT financial messaging system, prompting Moscow to reduce its dependence on the U.S. dollar.
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Yet other countries in the BRICS that do not face sanctions to the same extent still prefer a dollar-based financial system.
Trade & US Dollar & New BRICS Payment System
According to Brookings Institution data, the dollar is used for 58% of international payments (excluding those made within the eurozone) and 54% of foreign trade bills.
The report was published as President Putin prepares to host the annual BRICS summit in Kazan from October 22, 2024 to 24, 2024.
The group has recently expanded to include Iran, the United Arab Emirates, Ethiopia, and Egypt, reflecting its quest to strengthen its influence on the world stage.
[Also Read: US Economy, Donald Trump & Kamala Harris Snubbed By India, Narendra Modi & Dr. Ankit Shah]
New BRICS Payment System For US Dollar Demonetization
Russian proposals include the use of distributed ledger technology (DLT) or the creation of a multinational platform that allows settlements to be made using tokens.
The use of this model of the BRICS Payment system for settlement is most effective, as it eliminates the credit risk associated with the traditional banking system.
According to the report, DLT could reduce processing times and costs, saving BRICS countries up to $15 billion a year if half of all cross-border transfers were used through this technology.
[Also Read: US & Canada Target Indian Economy: All You Should Know]
Conclusion
The ensuing move or proposal by Russia at the coming BRICS summit very clearly aims to further the process of /de-dollarization at the global level, gradually replacing the US Dollar with the new BRICS payment system or the new BRICS Currency in the years to come.
Your FAQs Answered Here:
What is BRICS payment system?
The BRICS payment system is a proposed financial mechanism designed to reduce the reliance of member countries on the US dollar for international transactions. It’s a pivotal part of a broader effort by the BRICS group (Brazil, Russia, India, China, and South Africa) to challenge the existing dominance of the US dollar in the global financial system at the global stage.
While the specific details of the BRICS payment system are still being finalized, it is anticipated to involve a network of commercial banks that will facilitate transactions in local currencies. This would significantly reduce the need for countries to convert their currencies into US dollars for international trade.
Additionally, the BRICS payment system is likely to involve direct links between central banks of member states. This would enable more efficient and secure transactions between countries.
The ultimate goal of the BRICS payment system is to create a more equitable and stable international financial system that is less vulnerable to external shocks and pressures. However, it’s important to note that the development of the BRICS payment system is still in its early stages, and its success in achieving its objectives remains to be seen.
When will BRICS currency be released?
The exact release date for the BRICS currency remains uncertain. While discussions and proposals for a new BRICS currency have been ongoing, several factors could influence its timeline, including:
Technical Development: Creating a new currency requires substantial technical and logistical planning.
Political Consensus: All BRICS member states must reach a unified agreement on the terms and conditions of the new currency.
Economic Feasibility: The new currency must be economically viable and sustainable.
To stay informed about the latest developments regarding the potential release date of the BRICS currency, it’s recommended to follow news and announcements from the BRICS nations and international financial organizations.
When will BRICS currency be released 2024?
The anticipated launch of the BRICS currency in 2024 remains uncertain, despite ongoing discussions and advancements. The upcoming BRICS summit in October 2024 is expected to shed more light on this matter.
While the primary focus is currently on establishing a BRICS payment system, rather than a fully-fledged currency, there is growing interest in developing a system that facilitates trade and financial transactions among BRICS nations. Blockchain technology is being explored as a potential foundation for this system, offering potential benefits such as security, transparency, and efficiency.
To stay informed about the latest developments regarding the BRICS currency, it is advisable to closely follow the news and announcements from the BRICS nations.
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