BRICS to Develop Payment System Powered by Blockchain

16 views 12:27 pm 0 Comments July 18, 2024

The BRICS, an intergovernmental group, including Brazil, Russia, India, China, and South Africa, is planning to develop an independent payment system which is powered by blockchain technology and digital currencies, Kremlin aide Yury Ushakov said in an interview with Russian news agency TASS.

The organization is looking for more expansions in 2024. The payment infrastructure will prioritize user-friendliness, affordability, and staying neutral from political influence, according to Ushakov.

“We believe that creating an independent BRICS payment system is 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,”
said Ushakov.

BRICS Taps Blockchain

Table of Contents

Ushakov revealed the goals of the BRICS group when it comes to the international financial system this year. The key task is to increase the role of BRICS within the international monetary and financial system.

Ushakov additionally mentioned the 2023 Johannesburg Declaration, where BRICS leaders already outlined two strategies, including promoting settlements in national currencies and strengthening correspondent banking networks.

The first strategy focuses on encouraging BRICS countries to use their own currencies for international transactions instead of relying heavily on the US dollar.

This is also in accordance with one of the BRICS’ targets – to reduce the dominance of the US dollar. The second strategy is aimed at improving communication and collaboration between banks in BRICS countries to facilitate smoother cross-border transactions.

As noted by Ushakov, the BRICS’ future priority is more concentrated on the development of the Contingent Reserve Arrangement (CRA). CRA is a financial agreement in which BRICS countries contribute funds to be used in case of financial emergencies. The group also plans to explore the feasibility of using currencies other than the US dollar within the CRA framework.

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

Bitcoin Part of BRICS?

The world is questioning the dominant influence of the US dollar, especially after the COVID-19 pandemic and the bleak economic outlook as a result of it. However, beating the dollar is not an easy task, the dollar still dominates global foreign exchange reserves.

But just because it’s not easy doesn’t mean it’s impossible. Morgan Stanley, a well-established financial services company, predicts that BRICS and Bitcoin could hinder the US dollar in 2024. Morgan Stanley sees a chance that the growing alliance and the flagship crypto contribute greatly to the dollar’s weakening this year.

There are also speculations that BRICS countries will consider adopting Bitcoin and its underlying technology amid larger de-dollarization efforts and the rise of digital currencies. BRICS has long discussed the idea of ​​a BRICS common currency that would be a cryptocurrency, and Bitcoin could help reduce the US dollar’s dominance.

So far, it has been confirmed that the group will use blockchain.

The rise of Bitcoin and other cryptocurrencies in recent months indicates that investors and institutions are looking for alternatives to the monetary system. Bitcoin has taken a big step forward thanks to the U.S. Securities and Exchange Commission (SEC) approving 11 Bitcoin spot ETFs. This investment vehicle will bring more than $8 billion in net inflows to the market.

Bitcoin is back to its record high range of around $69,000. This breakthrough marked a monumental moment for the crypto market. At the time of writing, Bitcoin’s rise in popularity could become a global reality helping BRICS de-dollarization initiatives.

The surge is driven by the continued success of newly launched spot Bitcoin ETFs. These investment products, led by BlackRock’s record offering, have ignited excitement for the leading coin and the crypto market.