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The members of BRICS have announced that they are developing a blockchain-based payment system that will facilitate direct international payments.
The BRICS countries, namely Brazil, Russia, India, China and South Africa, are making a significant move that is expected to reshape global financial transactions. It is set to develop a unified payment system utilizing digital currencies and blockchain technology.
It is an ambitious project that will mark a pivotal shift towards reducing dependency on traditional financial systems and the dominant Western banking infrastructure. The project aims to facilitate direct transactions among all the BRICS nations.
Direct Transaction Process
The transaction process will bypass the conventional methods that generally involve USD. It will reduce the transaction costs and time to execute the transaction. The collaboration is actively working for de-dollarization and objectively searching for alternatives to the U.S. dollar in international settlements.
They are putting efforts beyond the payment system as they continue to develop the Contingent Reserve Arrangement using currencies other than the USD.
It will leverage digital currencies and blockchain, and with this, the system promises enhanced security, transparency, and efficiency in cross-border transactions, characteristics that are sometimes lacking in current financial mechanisms.
Creation of the Blockchain-based Payment System
The creation of this direct BRICS payment system emphasizes the growing trend among nations to explore and adopt digital currencies as a means to promote economic independence and innovation. It collectively acknowledges the potential for digital finance to offer more accessible and equitable financial services on a global scale.
Ushakov, a news reporter from Russia, has said, “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.”
He further emphasized that this system will not only be convenient for governments, businesses, and the general population but also free of political influence and economically efficient.
It is important to emphasize the increasing settlement of national currencies and the diversification of correspondent banking networks to ensure the security of international transactions. However, the timeline for the launch of the new BRICS blockchain payment system is unclear.
Criticism around the BRICS Payment System
The critics of the system have highlighted the potential challenges in the development and growth of the payment system. The challenges include regulatory harmonization, cybersecurity risks, and the impact on global currency markets.
Despite these multiple concerns, this current move by BRICS can bring further innovation to the international payment system. These innovations will encourage other regional blocs and countries to consider similar innovations to build financial autonomy and resilience.
With this new payment system, BRICS nations are venturing into uncharted territory with their digital currency-based payment system. The world is closely watching this venture by BRICS. The expected success of this initiative would not only redefine the financial relationships between these emerging economies but also lay the foundation for the future of international financial interactions and transactions.
The Russian Finance Ministry, in collaboration with the Bank of Russia and other BRICS partners, is actively working on building the BRICS Bridge multisided payment platform.
Steefan George is a crypto and blockchain enthusiast, with a remarkable grasp on market and technology. Having a graduate degree in computer science and an MBA in BFSI, he is an excellent technology writer at The Coin Republic. He is passionate about getting a billion of the human population onto Web3. His principle is to write like “explaining to a 6-year old”, so that a layman can learn the potential of, and get benefitted from this revolutionary technology.
