- For international trade, BRICS plans to replace the US dollar with its own cryptocurrency.
- According to Russia, this action establishes a viable substitute for fiat currencies in international trade. The goal of BRICS is to create Central Bank Digital Currencies (CBDCs) to displace fiat currency.
- Such digital currency initiatives in the West are opposed by the US.
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The BRICS countries are resolutely advancing towards abandoning the US dollar, opting instead for a proprietary cryptocurrency for international transactions. Anatoly Aksakov, Chairman of the Russian State Duma Committee on the Financial Market, disclosed this significant transition, emphasizing the bloc’s intent to substitute traditional fiat currencies with digital assets for cross-border dealings.
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BRICS, now including Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates, has a clearly defined strategy for de-dollarization, promoting the use of their own currencies. This approach received a significant boost with the launch of the BRICS Pay system, a crucial development in their journey toward independence from the dollar.
In the past year, this expanded group has not only gained new members but has also reinforced its commitment to utilizing local currencies in bilateral trade transactions. At the 2023 annual summit, the expansion was emphasized as a critical step toward creating a multipolar global order. The focus has now shifted to phasing out the dollar, with the bloc actively pursuing the replacement of the dollar with cryptocurrencies in all international transactions.
Russia has made a significant contribution to the initiative, characterizing it as a “serious channel to replace fiat currencies in international transactions.” The bloc’s commitment to creating Central Bank Digital Currencies (CBDCs), which they plan to use as a direct replacement for fiat money, serves as the foundation for this action. A clash of the titans of finance is imminent as a result of the U.S.’s vocal opposition to similar projects in the West.
Financial Systems Integration: The BRICS Bridge Initiative
Sergey Ryabkov, the deputy foreign minister of Russia, has led further developments, talking about the establishment of new financial platforms to facilitate the growing use of digital assets rather than traditional fiat options. According to Ryabkov, these platforms would create a “BRICS Bridge” that would connect the financial systems of the BRICS nations. Stablecoins and other cryptocurrencies will probably be used in this endeavor, giving the bloc a structured way to expedite its de-dollarization efforts.
But the US dollar’s absence from these transactions might worry international traders and countries that are now closely entwined with the dollar-based financial system. The ten BRICS countries seem committed to their plan, though.
In addition to their financial strategies, the core five-nation BRICS bloc is actively developing a blockchain and digital technology-driven payment system, according to the Russian news outlet TASS. Kremlin aide Yury Ushakov highlighted the significance of this independent payment system, noting its design to be convenient for governments, the public, and businesses, as well as cost-effective and apolitical.
This effort is part of a larger agenda to enhance BRICS’ influence within the global monetary system and to continue reducing reliance on the U.S. dollar for settlements—a commitment Ushakov confirmed will continue with the evolution of the Contingent Reserve Arrangement that focuses on alternative currencies.
A collaborative effort by Russia’s Finance Ministry, the Bank of Russia, and BRICS partners to establish the BRICS Bridge as a multisided payment platform aimed at enhancing the global monetary system was highlighted in last month’s TASS report, which added to the financial narrative. To further highlight the growing emphasis on digital solutions in global finance, Financial Stability Board Chair Klaas Knot has signaled to G20 finance ministers that tokenization, AI, and crypto assets are top priorities.
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