BRICS Digital Payment System Could Be a Global Bombshell, Says Russia

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As a seasoned researcher with over two decades of experience, I’ve witnessed the evolution of global politics and economics from the fall of the Berlin Wall to the rise of BRICS. The recent announcement about the expansion of BRICS and the development of the BRICS Bridge digital payment platform has caught my attention.

As a researcher, I’ve taken note of a recent announcement made by Valentina Matviyenko, the Speaker of Russia’s Federation Council, in a report by TASS, a major Russian state-owned news agency. She shared that significant strides have been made on the BRICS digital payment platform, an initiative which, if successful, could significantly alter global financial transactions. This advancement is particularly noteworthy given Russia’s ongoing efforts to address the challenges posed by extensive international sanctions and its exclusion from the SWIFT payment network.

BRICS stands for a group made up of five significant developing economies: Brazil, Russia, India, China, and South Africa. Economist Jim O’Neill coined this term in 2001 to refer to these burgeoning economic powers that were predicted to exert substantial influence on the global market. Over the years, BRICS transformed from an idea into a formal intergovernmental body, with its members collaborating across several areas such as economic growth, political alignment, and cultural interaction. The organization’s objectives also encompass advocating for changes in international financial and political institutions to better mirror the evolving global power distribution.

By August 2024, BRICS has experienced a substantial enlargement. At the BRICS Summit in Johannesburg held in 2023, it was revealed that six more countries would be part of the alliance, increasing its membership to eleven. Starting January 1, 2024, these new members are Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). This expansion highlights BRICS’ growing power and strategic relevance in international affairs.

Adding these new members supports BRICS’ long-term ambition of establishing a more equitable global economic structure, serving as a balance to institutions such as the International Monetary Fund (IMF) and the World Bank, which are heavily influenced by the West. By broadening its membership, BRICS seeks to strengthen collaboration among developing economies, tackling financial disparities worldwide and championing a fairer international governance system that includes more participants.

According to a TASS report, during a press conference on August 1st, 2023, Matviyenko revealed details about the BRICS Bridge – a new financial payment platform in development among the BRICS nations. This self-sufficient system is being created for cross-border transactions between BRICS countries, serving as an alternative to current global financial networks.

Matviyenko pointed out that the project has reached an advanced point in its development, indicating that conversations have transcended the theoretical realm. As the present chair of BRICS, Russia is collaborating with the central banks and finance ministries of all member states, including the newer ones, to facilitate progress. According to Matviyenko’s statement, the platform is advancing steadily with significant contributions from key financial authorities.

Matviyenko expressed strong belief in the significant influence the platform could have, implying that if effectively rolled out, it might lead to widespread effects across the globe. She described the project as a “positive bombshell” and indicated that the BRICS digital payment system could be a major point of discussion at the upcoming BRICS summit in Kazan this October. She is optimistic that the summit will either endorse the platform or finalize the details for its deployment.

Considering Russia’s current fiscal predicament, marked by ongoing sanctions and disengagement from SWIFT, it’s noteworthy that the Bank of Russia has devised a homegrown payment system. Remarkably, this system has garnered interest from multiple nations. Matviyenko emphasized that this move underscores the feasibility of alternative financial systems in trying circumstances.

Matviyenko also expressed thoughts on broader shifts within the global financial sphere, highlighting the diminishing strength of the U.S. dollar, partially attributed to the escalating U.S. government debt. She pointed out a rising tendency among nations to execute cross-border transactions using their local currencies, avoiding conventional systems such as SWIFT.

As a researcher studying global financial systems, I am convinced that the proposed BRICS digital payment system has the potential to redefine finance on a global scale. By offering an innovative model, it could serve as a template for other nations to emulate. Interestingly, parallel discussions regarding a similar digital payment platform are underway within the Shanghai Cooperation Organization (SCO), suggesting a broader reach and influence that this system might achieve.

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2024-08-19 13:11