BRICS Set to Create Blockchain-Based Payment System

In a move to challenge the hegemony of US dollar in the international market, BRICS, an intergovernmental organisation comprising Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the UAE will work to create an independent payment system based on digital currencies and blockchain, Kremlin aide Yury Ushakov said on Tuesday.

In an interview with Soviet news agency TASS, Ushakov said that the organisation believes in creating an independent BRICS payment system, an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain.

“The main thing is to make sure it is convenient for governments, common people and businesses, as well as cost-effective and free of politics,” he said and added that the specific task for this year is to increase the role of BRICS in the international monetary and financial system.

He recalled that in the 2023 Johannesburg Declaration, the leaders set the focus of BRICS countries on increasing settlements in national currencies and strengthening correspondent banking networks to secure international transactions.

“Work will continue to develop the Contingent Reserve Arrangement, primarily regarding the use of currencies different from the US dollar,” Ushakov pointed out.

According to Ushakov, BRICS has already surpassed the Group of Seven (G7) in terms of purchasing power parity as the group accounted for 35.6% of the global GDP, while the G7 accounts for 30.3%. By 2028, the situation will evolve further in BRICS favour: 36.6% versus 27.8%, he pointed out.

“The collective share of the member states in the global economy is $58.9 trillion. BRICS accounts for more than one-third of the Earth’s dry land (36%), 45% of the world’s population (3.6 billion), over 40% of all oil production, and about a quarter of the world’s exports of goods,” he noted.

Multisided Payment Platform

Last week, another TASS report said Russia’s Finance Ministry, the Bank of Russia and BRICS partners will create the BRICS Bridge multisided payment platform in an effort to improve the global monetary system.

Also in February, Klaas Knot, the Chair of the Financial Stability Board, which keeps an eye on the global financial system, wrote to finance ministers from the Group of 20 (G20) countries that crypto assets, tokenisation and artificial intelligence (AI) remain priorities.

It may be recalled that the BRICS group of emerging economies has welcomed 2024 by officially adding five developing nations including Saudi Arabia, the UAE, Iran, Egypt, and Ethiopia on January 1 this year.

The BRICS economic alliance has flourished last year, which was undoubtedly a year of growth, as the bloc fast-tracked a host of initiatives. Those range from its de-dollarisation plans to its first-ever expansion bid.

In a related development, a report from Sputnik International said that Bank of Russia was ready to begin initial testing with China and the countries making up the Eurasian Economic Union (EAEU). The EAEU comprises Belarus, Kazakhstan, Armenia, Kyrgyzstan, and Russia.

Russian Finance Minister Anton Siluanov said that Russia was eyeing new digital currency-backed settlement alternatives with the oil-rich Gulf nations.

While Siluanov’s comments did not mention any nations in particular, analysts expect the UAE to form part of the initial testing, given its previous work with digital currencies.