At the BRICS 2024 Summit in Kazan, Russia, leaders of member countries reaffirmed their commitment to establishing an independent global economic system based on their national currencies.
In response to global challenges related to unilateral coercive sanctions, BRICS initiated an ambitious project called BRICS Clear, an independent cross-border payment system based on national currencies. According to VOA, the proposal recommend by the Russian Federation ahead of the summit goals to construct another financial infrastructure that may enable wider circulation of national currencies.
By supporting inclusive cross-border payment instruments, BRICS countries will actively promote the increased use of local currencies in financial transactions between member states, in addition to with their trading partners. The move reflects a collective effort to create a more balanced and sustainable international economic system while reducing dependence on the US dollar, which dominates about 90% of world trade volume.
Despite technical and regulatory differences that must be addressed, Bloomberg reported that efforts to integrate payment systems amongst BRICS countries have the potential to extend trade volumes between member countries by 5-7%.
Vladimir Putin opened the expanded BRICS summit with a call for the event of another international payments system that will prevent the dominance of the US dollar. However, the summit communique showed little progress on this area, and Putin stated that although there have been problems with cross-border payments, there have been no plans to create a dedicated system as the present infrastructure was considered sufficient.
Putin acknowledged that delays in payments with key partners reminiscent of China and Turkey resulting from pressure from Western regulators have turn out to be obstacles for Russian corporations and banks. He stressed that the present financial communication systems of the Russian Central Bank and BRICS might be used to facilitate mutual payments in local currencies.
At a summit in Kazan, Russia, Putin claimed that the dollar is getting used as a weapon, stating: “The dollar is being used as a weapon. We really see that this is the case. I think this is a big mistake for those who do it.” He also mentioned that nearly 95% of trade between Russia and China is currently in rubles and yuan.
In response to this case, Russia is working to create a payment infrastructure that may operate outside the SWIFT system, which is predicated in Belgium. This de-dollarization initiative is taken into account some of the concrete proposals to come back out of the summit.
However, efforts to cut back dependence on the dollar have raised concerns amongst some BRICS members, especially Brazil and India, who fear the fast-growing club may appear pro-China and anti-Western.
