BRICS countries plan to create payment network backed by digital currencies in drive for de-dollarization: report

Brazil, Russia, India, China and South Africa – the five nations that make up the BRICS group – are trying to reduce their dependence on the US dollar. To bring this wave of de-dollarization into effect, the BRICS group plans to develop a digital payments network backed by digital currencies. This information was revealed in a recent report published by the Russian news agency TASS. This independent and potentially decentralized payment system will be supported on blockchain networks.

“The key thing is to make sure it’s convenient for governments, ordinary people and businesses, as well as cost-effective and free of politics,” quoted by TASS Yuri Ushakov said in a recent interview. Ushakov has been a foreign policy adviser to Russian President Vladimir Putin since 2012.

BRICS countries are exploring ways to increase their participation in shaping financial and monetary systems at the international level. This payment network, once established, is likely to give other countries a leg up in terms of incorporating digital currencies into their existing fintech systems.

Plans to bring together a new digital payments network were initiated after certain discussions that began during the Johannesburg Declaration in 2023. At that time, leaders of the BRICS group decided to focus on ways to process settlements in currencies other than the US dollar. dollar.

The US dollar has ruled the world economy for decades. However, in the post-COVID-19 era, the US dollar has experienced volatile times due to successive interest rate hikes that have been announced to stabilize the US economy against a climate of inflation.

As the US raised its interest rate, several central banks around the world were also forced to raise their respective interest rates – leading to financial losses for weaker and developing economies.

This served as a major impetus for the BRICS group to begin looking for alternative payment options that do not rely on a single fiat currency such as the US dollar.

According to the TASS report, Ushakov said: “Work will continue on the development of the Contingent Reserve Agreement, mainly regarding the use of currencies other than the US dollar.”

As the BRICS nations step up their work around creating this payment infrastructure, the Financial Stability Board (FSB) said it will continue to work with the G20 group of nations to formulate and implement regulations to uniformly govern the digital currency ecosystem on a global level.