In a pivotal moment for the BRICS economic alliance, the “BRICS Pay” system was officially unveiled during the BRICS Business Forum held in Moscow a few days ago, as part of the ongoing BRICS summit for 2024. In a symbolic gesture of the group’s commitment to launching the system, BRICS payment cards were distributed to participants at the forum. These promotional cards contained 500 Russian rubles, equivalent to approximately $5.20, and were utilized for purchasing coffee or souvenirs at the event. The cards featured a dual-sided design, with a QR code on one side and detailed instructions on how to use the card for payments on the other. This initiative comes in response to the United States’ use of the dollar as a tool for sanctions and the soaring levels of US national debt, prompting countries, particularly those in the BRICS group, to enhance the use of national currencies in international trade.
The unveiling of the BRICS payment system represents a significant advancement towards the goal of de-dollarization, a decision that has been long anticipated. This system has been under development for several years. According to media reports, BRICS nations have been working since 2019 to establish a unified payment system as part of a retail payment and financial transfer platform for member countries. A year later, the BRICS summit announcement in Moscow, issued on November 17, 2020, commended the ongoing efforts to enhance cooperation among national payment systems, particularly the establishment of the BRICS Payments Working Group, and expressed hope for further progress in this endeavour, as reported by the Xinhua News Agency.
Last year, following the BRICS summit held in Johannesburg, which included the five member countries with emerging economies (Brazil, China, India, and South Africa), the United States downplayed the success of this bloc in potentially undermining the dominance of the dollar. This was particularly evident given the momentum surrounding the summit, especially regarding the possibility of member countries issuing a new currency for intra-group trade that could challenge the US dollar. Additionally, there has been a surge in requests for membership, as the group has opened its doors to expansion. US National Security Advisor Jake Sullivan remarked that “the United States does not view the BRICS group as a potential geopolitical competitor.”
In response to inquiries about whether Washington is concerned that BRICS might pose an economic and geopolitical threat to the United States, Sullivan stated, “The United States does not believe that BRICS has become a geopolitical competitor… and we do not see the group evolving into any form of geopolitical rivalry or anything of that nature.” He further noted: “The BRICS group, in its current form, consists of a diverse array of countries that have differing views on critical issues in the Indo-Pacific region.”
However, this year, the situation appears to be markedly different. The launch of the “BRICS Pay” system is undoubtedly an effective step that significantly accelerates the process of de-dollarization. The concept behind this mechanism revolves around creating a dedicated platform based on digital currencies within the BRICS nations for financial settlements. This mechanism is poised to disrupt the Western “SWIFT” system’s monopoly on global financial transactions. It represents a positive development for countries aiming to safeguard their sovereignty and commercial and financial freedoms. Additionally, this decentralized mechanism, which will incorporate multiple currencies, will enable the circumvention of Western sanctions and obstacles. It will also enhance the economic influence of the BRICS group and expedite the emergence of a supranational currency, posing a direct threat to the status of the US dollar. Overall, this initiative strengthens the capacity to settle debts and bolsters the economic stability of BRICS member states.
There is no doubt that the BRICS group has experienced significant expansion in its influence over the past five years, having welcomed new member countries such as the United Arab Emirates, Egypt, Iran, and Ethiopia, which has strengthened its economic power. The International Monetary Fund projects that the GDP share of BRICS nations will reach approximately 38% of the global total by 2028, surpassing that of the G7.
Despite the US administration’s denial of the significance of the BRICS alliance as a genuine geopolitical competitor to the existing global order, the success of BRICS is an undeniable reality. This was evident during the first US presidential debate, where former President Trump reiterated his commitment to imposing stringent tariffs on countries attempting to move away from the US dollar as the global currency. He has taken a particularly strong stance against China, threatening to impose tariffs ranging from 60% to 100% on Chinese imports if he is elected.
The BRICS nations are earnestly working towards reshaping the global economic system by developing their financial frameworks. The alliance aims to connect the financial systems of its member countries, facilitating transactions in their respective digital currencies. Currently, approximately 90% of trade between Russia and China is conducted in rubles or yuan, and this practice is expanding, with the UAE and India also entering agreements to settle trade in their local currencies instead of the dollar. Furthermore, BRICS countries are expected to continue discussions on establishing a gold-backed currency as an alternative to the US dollar. This potential BRICS currency would enable these nations to assert their economic independence while competing with the existing international financial system.
Ultimately, it cannot be denied that the implementation of such a project is not an easy task, as the bloc may encounter several obstacles when establishing a global financial mechanism that includes dozens of countries. This is particularly true given the stability of the US economy and the global investors’ confidence in it as a store of value and a medium of exchange. Furthermore, the United States possesses the largest government bond market, which renders the dollar a haven during financial crises. Additionally, initiating this mechanism could provoke pressures from Western sanctions, as the system may pose a threat to the current international financial system dominated by the West. Nevertheless, we are faced with an undeniable reality: the world is indeed beginning to change, and alternative options may become available shortly.
Dr. Marwa El-Shinawy – Academic and Writer
