BRICS, a group of five emerging economies – Brazil, Russia, India, China, and South Africa – is considering to develop a cryptocurrency to create a single payment system within the countries.
Reported by the Russian news daily RBC on Thursday, the prospect was tabled and received approval from the BRICS business council at a meeting in Brazil.
Minimizing dependence on the US dollar
Made public by Kirill Dmitriev, director-general of the Russian Direct Investment Fund (RDIF), a $10 billion sovereign wealth fund by the Russian government, the decision has been taken to reduce dependability on the US dollar for international transactions. The share of the US dollar usage in foreign trade settlements also went down from 92 percent to 50 percent in the last five years.
“An efficiently operating BRICS payment system is able to stimulate settlements in national currencies and ensure the stability of settlements and investments between our countries, which form more than 20% of the global influx of foreign direct investment,” Dmitriev said.
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Nikita Kulikov, a member of the State Duma’s expert council, told the local publication that the proposed cryptocurrency would only be used to facilitate trade transactions rather than acting as a digital form of money.
“Most likely, it will be like certain obligations that can be transferred from one legal entity to another to confirm that the recipient will have claim rights, and the contractor will have obligations for a specific amount. It will not be money, we can say that it will be a paperless document flow to facilitate transactions,” Kulikov said.
Meanwhile, to minimize the dominance of SWIFT on the banking system, Russia, China, and India are reportedly looking into alternative technologies.
The Chinese central bank is also in the process of launching a digital version of the yuan. According to industry experts, the country will tap a massive market for international payments with this.