In October, Russian President Vladimir Putin confirmed that BRICS countries were discussing using digital currencies to reduce Western influence on fintech. Currently, the group is considering the creation of a digital asset platform with the aim of reducing dependence on the US dollar for international transactions. President Putin has expressed support for the initiative and highlighted that digital currencies can benefit not only BRICS countries but other developing economies as well.
According to Putin, the BRICS countries are planning to temporarily launch a service called BRICS Pay, Crypto Briefing reports. The platform will be used by member countries including Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates.
Built on a blockchain network, the platform is expected to facilitate cross-border settlements for the above-mentioned countries. Financial assets such as cryptocurrencies and CBDCs will enable transactions without the need for brokers or intermediaries. Additionally, using digital assets for payments can reduce the service fees typically charged by payment facilitators for fiat currency transactions.
To support these payments in digital currencies, the BRICS countries are also considering launching a messaging system like SWIFT – a secure platform for sharing information that is used by many financial institutions.
The BRICS grouping has been trying to effect de-dollarization since the beginning of this year. In March this year, Russian publication TASS reported that the group has been proposed to create a potential decentralized platform to integrate digital assets into the existing financial systems of the economies involved.
In recent years, the US dollar has faced significant volatility due to persistent interest rate hikes in the post-COVID-19 era. For China and Russia, the need to reduce dependence on the dollar is particularly pressing, as the US has imposed numerous sanctions on payments originating from these countries.
The 16th BRICS summit was held in Kazan, Russia between 22 October and 24 October. The issue of navigating the current international payment systems, which the BRICS sees as dominated by the dollar, was reportedly one of the top agendas during the meeting.
It is worth noting that India is also collaborating with G20 countries to develop a comprehensive set of global crypto rules. However, officials from the RBI and India’s Finance Ministry have not yet provided any details about the digital asset platform under discussion by the BRICS group.
