BRICS announce a blockchain-based payment system to create a common currency

BRICS announce a blockchain-based payment system to create a common currency
/ bne IntelliNews
By bne IntelliNews March 28, 2024

For a long time, the BRICS countries have been trying to move away from the dollar, but creating a common currency has not been possible, due to the dominance of China's economy within the group, which means any common currency would de facto be the yuan.

However, Kremlin aide Yury Ushakov said in an interview with TASS that a solution has been suggested: instead of a currency, a new blockchain-based payment system will be used called “BRICS Pay”.

"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," he said.

Ushakov said the goal for this year is to increase the role of BRICS in the international monetary and financial system. In 2023 the members said in the Johannesburg Declaration would work on increasing settlements in national currencies and strengthening correspondent banking networks to secure international transactions. "Work will continue to develop the Contingent Reserve Arrangement, primarily regarding the use of currencies different from the US dollar," the Kremlin aide pointed out.

Russia has already increased the use of national currencies in its mutual trade with friendly countries to 75% and is due to host this year’s BRICS summit in the Russian region of Kazan this summer.  

This is not a new common BRICS currency, but rather an analogue of SWIFT for transactions in national currencies in digital form operating on blockchain technology.

Apparently, this will be integrated with the digital versions of the ruble, yuan, rupee, etc., whose creation is also expected in the very near future.

Russia has accelerated its plans for digital currencies, which operate outside the control of international regulators. The Central Bank of Russia (CBR) has been working to create the long-discussed central bank digital currency (CBDC) – the digital ruble – which is expected to enter into circulation in 2025.

In accordance with new legislation in 2023, the Central Bank of Russia obtains the status of the digital ruble platform's operator. The regulator will also be responsible for the security of digital rubles in circulation, as well as for the organisation and round-the-clock operation of the platform.

The CBDC is not a blockchain-based “coin” similar to those issued by other blockchain-based projects, but an electronic currency, as the CBR controls the emissions of the tokens, which are also under the supervision of the central bank in the same way as fiat currencies are issued and regulated.

The CBR rolled out a pilot of digital ruble in August last year that included several commercial banks, as it gets ready for the formal launch of the digital money. The CBR has also issued a series of guidelines on the digital currency "The Digital Ruble: what it is and how to use it".

"We were preparing a long while for the start of real transactions,” First Deputy Governor of the Bank of Russia Olga Skorobogatova said at a press conference at the time of the start of the pilot. “This pilot will involve, in the first instance, testing of such active transactions as the opening of wallets in digital rubles for banks, clients (individuals and legal entities), transfers of digital rubles between clients and payments in trade and service businesses.”