The global financial system is on the verge of a major upheaval. The BRICS bloc is planning to create an independent payment system to facilitate cross-border transactions between its members. The move aims to reduce their dependence on the US dollar by integrating local currencies for trade.
Towards a new payment system for BRICS
In line with their de-dollarization policy, the BRICS are actively preparing to establish an independent payment system called BRICS Pay. This system is designed to facilitate cross-border transactions between its members, without resorting to the US dollar. The initiative is supported by cutting-edge technologies such as blockchain. It can also become a powerful alternative to the SWIFT network.
Valentina Matviyenko, Speaker of the Federation Council of Russia, confirmed that the project is on track. “This is no longer just an idea, it is moving forward concretely,” she said. She also added that this system is a response to the aspirations of developing countries, wishing to free themselves from the hegemony of the dollar.
The main objective of this new mechanism is to allow BRICS member countries to settle their trade transactions in local currencies. Thus, they can bypass the fluctuations and economic pressures related to the American currency. More than 50 countries have already expressed their interestt to join this initiative before the BRICS summit scheduled for 2024. The majority of them come from Asia, Africa, South America and Eastern Europe.
The technological and geopolitical challenges of BRICS Pay
The implementation of BRICS Pay is not without its hurdles. The project will face several technological challenges, including integrating each country’s existing payment systems. BRICS Pay must be compatible with platforms such as India’s Unified Payments Interface (UPI) and Russia’s Mir system, which will require complex standardization efforts.
Geopolitically, BRICS Pay could change the balance of economic power. By reducing their dependence on the dollar, the BRICS could weaken the influence of the United States in global trade. However, this initiative also risks causing increased tensions with Western countries. The latter could see this move as a direct threat to the dollar's hegemony.
In concrete terms, the BRICS Pay project symbolises a growing desire among emerging economies to free themselves from the dominance of the dollar and to build a more resilient and autonomous financial infrastructure. However, to achieve its goals, BRICS Pay will have to overcome major technological, geopolitical and regulatory challenges. If these obstacles are overcome, this system could not only transform economic relations between the BRICS countries, but also redefine global financial balances.
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