The Kremlin supported the creation of a single BRICS payment system: we will move away from the dollar

Experts assessed the future of supranational digital currency on the blockchain

There have been talks about introducing their own currency for the BRICS member countries for a long time, but only now the Kremlin announced the creation of a unified payment system on the blockchain in the association. The task for the current year is to increase the role of BRICS in the international monetary and financial system. This was stated by Assistant to the President of the Russian Federation Yuri Ushakov. Experts told MK what advantages the unified payment system will have, and will it replace the dollar, and when will it appear?

Andrey Loboda, economist, director of communications at BitRiver: “The peculiarity is that the world has never had a supranational digital currency of an entire association of countries. There is a supranational currency, the euro, but it is not digital, and serves as the national currency in all eurozone countries. There are cryptocurrencies, but they are decentralized. But there is no digital currency created for trade between a group of countries yet.

The need here is that, firstly, confidence in the dollar has been largely lost. And not only because of its use by the United States as a political tool, but also because of the huge US national debt, the swelling of which could sooner or later lead to default. Secondly, it is easier to use a supranational currency in international trade than to pay in national currencies. Thirdly, when making payments in a supranational digital currency, parties to commercial transactions will not need extra intermediaries in the form of SWIFT, especially since their activities are also politicized.

Most likely, all BRICS countries will agree to trade in such a currency, because it will be technically convenient and non-political. A supranational currency is precisely what is needed so that there is no longer a currency hegemon, no matter who it is – the dollar, euro, yuan or ruble. It is like a cryptocurrency market where any digital token can easily enter. How long will it take to implement the initiative? At least a few years. To speed up the process, political will and consent of all BRICS member countries will be needed.”

Albert Koroev, head of the department of stock market experts at BCS World of Investments: “We are talking more about an analogue of SWIFT, which is more ambitious in its ambitions than a bilateral settlement system. Such a system will be outside the influence of the West, due to its lack of control over infrastructure, and will compete with the Western one in the long term. Attempts to shift bilateral trade exclusively to national currencies face limitations, particularly due to imbalances in trade flows. At the same time, questions regarding the readiness of countries such as India and China to jointly build such a system do arise.”

Fedor Sidorov, private investor, founder of the School of Practical Investing: “Previously, there was talk about the development of the BRICS countries’ own currency, similar to the euro. The purpose of its creation is comfortable mutual settlements between countries within the bloc, as well as stability of the exchange rate, regardless of politics. So in this light, the creation of our own settlement payment system looks like a consistent step. And the fact that they decided to base the new system on blockchain technology suggests that the BRICS leadership is looking to the future and strives to create a reliable and secure financial system now. Of course, such a system, coupled with a single currency of a large geopolitical bloc, will become an alternative to the US dollar and the EU currency. It is still premature to talk about whether there will be any dominant currency – however, with a high degree of probability, this role will fall to the yuan, as the currency of the state with the strongest economy in the bloc. Developing and implementing the currency system itself is a completely feasible task, especially since, for example, Russia already has some developments in the digital ruble. As for the introduction of the single BRICS currency, everything is somewhat more complicated. As we remember from the history of the creation of the euro, this may take about three five-year plans. So, we will probably see a working version of the system in the medium term.”

Ivan Samoilenko, managing partner of the communication agency B&C Agency: “Blockchain technology and digital currencies are the near future of the entire global financial system. And BRICS also needs to use modern tools in order to keep up with other regions of the world in the speed and ease of settlements. From this point of view, the association simply needs to keep up with the times.

The yuan will most likely be chosen as the currency of the unification of countries, which includes Brazil, Russia, India, China and South Africa. Because for a currency that will be uniform for several regions, it is necessary to choose the currency of the country whose economy is more powerful and stable than others. BRICS is China, the second economy in the world.

Building such a system may take years; it is a long and difficult undertaking. Whether the BRICS currency will be an alternative to the dollar depends on the state of the world and US economies. If the United States loses the title of world economic leader, and China becomes the first economy in the world, this is possible, but in the distant future.”