BRICS currency is coming soon, Iranian ambassador

BRICS currency is coming soon, Iranian ambassador
BRICS currency is edging closer to reality, according to a top Iranian official visiting Moscow. / CC: IRNA
By bne Tehran bureau May 19, 2024

Iran is actively participating in initiatives under Russia's leadership in BRICS, with the two countries working towards creating a single currency for the bloc, Iranian Ambassador to Russia Kazem Jalali said on Thursday, 16 May.

Speaking at a press conference during the "Russia-Islamic World: KazanForum," Jalali underscored Iran's significant efforts as a new BRICS member state.

"The creation of a new single currency within the framework of the association is what Russia and Iran are working on," the diplomat stated.

The Islamic Republic's insider pointed out that the United States uses the dollar to impose restrictions, which has made the use of national currencies in mutual settlements a priority.

Iran and Russia are the two most sanctioned countries with no access to Western payment systems, including Belgium-based SWIFT. The two sides have been slowly connecting their respective payment systems, MIR and SHETAB, to each other, which is reportedly now active. Moscow and Tehran have been leading the vanguard in creating parallel payment systems for the West, with the central banks of both countries working in tandem.

"More than 60% of bilateral trade is in rubles and rials," he said, adding that relations between Russia and Iran are now at the "golden stage."

Iran's inclusion in BRICS, alongside Saudi Arabia, Egypt, the UAE, Argentina and Ethiopia, marks a significant geopolitical shift.

As the association expands, the development of a BRICS currency is seen as a strategic move to challenge the dominance of the US dollar in global trade. This shift aligns with BRICS' ongoing efforts to enhance financial cooperation and reduce dependency on Western financial systems.

According to an earlier bne IntelliNews report, Iran stands to gain substantially from BRICS membership.

Benefits include increased trade opportunities, investment inflows and enhanced political leverage. By joining BRICS, Iran aims to bypass sanctions and integrate more deeply into the global economy. The reports highlight that the move is expected to bolster Iran's economic resilience and provide a platform for it to advocate for its interests on a larger international stage.

BRICS payments were previously touted by Kremlin aide Yury Ushakov in March. She said to 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 stepped up 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 CBR 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.”

The 15th International Economic Forum "Russia-Islamic World: KazanForum 2024" is being held from May 14-19 in Kazan, Russia.

This year's theme, "Trust and Cooperation," aims to strengthen trade, economic, scientific, technical, social, and cultural ties between Russian regions and the countries of the Organisation of Islamic Cooperation (OIC).

The forum also seeks to promote the development of Islamic financial system institutions in Russia.