Russia’s BRICS Pay System To Counter West (Worthy News In-Depth)
By Stefan J. Bos, Chief International Correspondent Worthy News
KAZAN/BUDAPEST (Worthy News) – Russia has launched an international payments platform for BRICS countries that is immune to Western sanctions and ends the need for dollar transactions.
The “BRICS Pay” system uses blockchain technology to store and transfer digital tokens backed by national currencies.
This, in turn, allows those currencies to be quickly and securely exchanged, bypassing the need for dollar transactions.
Russia views it as a way to resolve increasing problems in settling trade payments due to Western sanctions that were introduced after its full-scale invasion of Ukraine.
Moscow even has payment issues with allies such as China, where local banks fear they could be hit by U.S. sanctions for cooperating with Moscow.
Armed with smartphones and promotional BRICS Pay cards containing a complimentary 500 Russian rubles ($5,22) each, delegates could test the system by paying for coffee or souvenirs at the BRICS Business Forum held in Moscow.
The tests came ahead of the October 22-24 BRICS summit in Kazan, Russia’s most populous city on the banks of the Volga River, where Russia is expecting 22 leaders, including Chinese President Xi Jinping, who arrived on Tuesday.
SEVERAL ISSUES
They discuss payments and other issues at a time when the BRICS already account for 45 percent of the world’s population and 35 percent of the global economy.
Experts say the collective gross domestic product (GDP) of the four leading developing countries—Brazil, Russia, India, and China—will likely match that of today’s leading Western nations by 2032.
“The World Bank predicts that the U.S. dollar will lose its global dominance by 2025 as the dollar, euro, and China’s renminbi become co-equals in a “multi-currency” monetary system,” noted the Council on Foreign Relations, the U.S. think tank.
That sounds like music to President Putin and his allies’ ears: A Russian document monitored by Worthy News accuses existing institutions such as the International Monetary Fund (IMF) of serving the interests of Western countries and says they need “improvements to better serve the evolving global economy.”
Russian Finance Minister Anton Siluanov has urged BRICS members to create an alternative to the IMF.
Russia, the world’s top wheat exporter, also seeks the creation of a BRICS grain trading exchange backed by a pricing agency to create an alternative to Western bourses where international prices for agricultural commodities are set.
Among other initiatives to facilitate trade and investment, Russia proposes creating a “BRICS Clear” platform to settle securities trade.
BETTER COMMUNICATION
The document calls for better communication between member countries’ credit rating agencies and a standard rating methodology.
However, sources familiar with their thinking noted that the Russian officials stopped short of proposing a joint BRICS rating agency, an idea that the group had discussed earlier.
Yet, there remains skepticism about BRICS+’s capacity to become an effective institution in world economic affairs.
Expert Harry G. Broadman, who writes and speaks on global business, sustainability, and innovation, said the “lack of homogeneity will greatly limit—indeed is already limiting—their abilities to act effectively as a collective.”
He wrote recently that “One of the most obvious examples is a comparison between China and India. Although the two currently have populations of equal size and occupy large land masses, India is the world’s largest democracy, while China is ruled by a strongman overseeing an authoritarian Communist regime.”
Broadman noted that the long history of military skirmishes on the disputed Indo-Sino border—as recently as 2020 and again in 2022—“belies a cordial relationship between the two largest BRICS teammates.”
To date, “Beijing and Delhi have held more than 15 rounds of military talks on the matter with no resolution in sight. That’s not a good omen for the two Asian giants to successfully coordinate economically on the world stage,” he wrote in Forbes magazine.
ECONOMIC CONTRAST
He said the Group of Seven (G7) countries of the most developed economies “by contrast, are at similar stages of economic development.”
They operate, he stressed, “in line with market-oriented rules based on the pursuit of transparent cross-border trade and investment transactions; and espouse democratic ideals with leaders elected via open participation by their populations.”
Collectively, “their economies—which have generally grown largely steadily for decades—produce over 40 percent of world output,” Broadman explained.
Yet, with BRICS rapidly expanding, other experts suggest they will be an economic power to be reckoned with despite internal tensions.
“The growth of the BRICS+ shows that, after decades of strong economic development, emerging markets are now ready for a larger role in the world order,” said the Boston Consulting Group in a recent assessment.
If it’s up to Russian President Putin, that global role begins sooner than the West expects.
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