MOSCOW, Russia – In a landmark move for the BRICS economic alliance, the bloc unveiled its new “BRICS Pay” system that is set to redefine global cross-border payments.
In a symbolic gesture of the group’s commitment, BRICS payment cards were distributed to participants at the forum which was held in Kazan, Russia, from October 22 to 24.
The cards were equipped with 500 Russian rubles amounting to about $5.20, which were given for the purchase of coffee and souvenirs at such an event.
With one face logo and instructions for payment on the other, the cards had a QR code as well as a note on one face explaining its use for payment in detail.
The initiative is a counter- move against the currency speculators from the United States, making it a form of sanctions and the scary level of US national debt, which suggested countries, particularly those in the BRICS group, seeking ways of boosting the utilization of their national currencies in international trade.
Announced at the recent BRICS Business Forum in Moscow, this initiative reflects the group’s commitment to reducing reliance on the US dollar in international trade—a significant pivot in the landscape of global finance.
The Need for Change
For several years, the member countries of the BRICS have been striving to find an alternative to the U.S. dollar in their international trade. The launch of BRICS Pay is part of this de-dollarization strategy, particularly supported by Russia and China.
Indeed, during the official announcement, Valentina Matviyenko, President of the Russian Federation Council, clearly expressed that “BRICS Pay is no longer just an idea, it is a concrete project that is rapidly advancing.”
The objective is to reduce the influence of the dollar, which still represents 58 percent of international payments outside the euro zone in 2022. This dominance of the dollar, coupled with economic sanctions imposed by the United States on countries like Russia, has strengthened the BRICS’ determination to set up a more resilient cross-border payment system.
It is due to US control over international trade and its eminent status as the world’s reserve currency that the dollar matters regardless of the scale of operations.
According to the US Federal Reserve, the dollar accounted for 96 percent of international trade invoicing in the Americas and 78 percent globally from 1999 to 2019. However, this dynamic is changing as countries actively seek to reduce dependence on the dollar. The BRICS group -Brazil, Russia, India, China, and South Africa- is considering ways to boost their economic independence from US financial dictates.
The BRICS Pay system promises several key advantages:
As the BRICS seek to free themselves from the financial influence of the United States, the creation of an autonomous payment system could redefine the rules of international trade.
Financial analysts and experts suggest that this new game changer will be efficient in Cross-Border Transactions: Leveraging blockchain technology and digital currencies. Although not in operation, it is expected digital currency to be at the center of the transactions. BRICS Pay aims to streamline cross-border payments, facilitating faster and cheaper transactions.
BRICS also believes the new system will facilitate financial inclusion: By promoting the use of national currencies in trade, BRICS Pay could enhance access to financial services for millions in the member nations.
Other advantages made public at the just ended summit includes strengthening economic integration and de-dollarization. It is said the payment system encourages closer economic ties among BRICS nations, fostering a more unified trading bloc.
While the US National Security Advisor Jake Sullivan remarked that “the United States does not view the BRICS group as a potential geopolitical competitor. Experts say it is in fact working to destabilize the US currency. BRICS Pay is a strategic step toward mitigating the influence of the US dollar, allowing member countries to assert their economic independence.
So far the BRICS alliance officially expanded by adding 13 new nations as partner countries, marking a significant step in the bloc’s growth and influence on the global stage.
Implications for the US Dollar
BRICS Pay stands to have far-reaching ramifications for the US dollar. While experts debate the potential of the system to counter dollar dominance, the prevailing sentiment is that a stable and widely-accepted BRICS currency would dwarf the dollar’s status as the premier reserve currency. Such an eventuality would reduce dollar demand and plunge it into instability, with grave consequences for American households and the global economy.
Moreover, the rising trend of de-dollarization is already visible, with countries like China and Russia executing bilateral trade in their currencies. This is just part of a larger wish of countries to lessen their dependence on the US financial system, a journey that will likely gather momentum with the advent of BRICS Pay.
Since 2019, the BRICS nations have been putting in place the groundwork for a unified payment system, culminating in the launch of BRICS Pay. The discussions around a possible intra-group currency gathered steam especially after the summit held in Johannesburg last year. Current trends suggest that the BRICS bloc means business in establishing an alternative financial framework.
To the skeptics in America, BRICS Pay is anything but an organization vying for geopolitical ambitions. The initiation of BRICS Pay also shows a significant step towards financial independence. As the group keeps expanding its membership and influence, implications for global finance could be huge, very possibly reinventing a new balance of power in international markets.
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Looking Ahead
The BRICS nations are actively pursuing greater economic integration through initiatives like BRICS Pay. Discussions at the Kazan summit also hinted at the possibility of establishing a new reserve currency, further signaling the group’s ambitions to restructure the global financial order.
As the BRICS Pay system rolls out, its success will not only revolutionize cross-border payments but could also challenge the U.S. dollar’s long-standing dominance. This shift may pave the way for a more balanced global economy, where financial independence and sovereignty become defining features of international trade.
