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The BRICS countries discuss the launch of the new cryptocurrency and unified payment system

Nov 21, 2019

The theme of the 11th annual BRICS summit which was held in Brazil this November was strengthening economic growth. As reported by Russian news outlet RBC, five growing economies including Brazil, Russia, India, China, and South Africa, were discussing the launch of the “BRICS cryptocurrency” and unified payment system.

The idea of creating a new cryptocurrency and a single payment transaction system between the five countries was supported by the BRICS Business Council. As reported earlier, the unified payment system will allow to pay for purchases in any BRICS country, regardless of the currency of the buyer account, simply by using the mobile app. Apart from the convenience in day-to-day usage, the BRICS countries expect that the crypto solution will minimize the reliance on the US dollar. Currently, the states are still heavily dependent on the US dollar when it comes to international transactions, though its usage in foreign trade settlements dropped from 92% to 50% in recent years. The creation of a single payment transaction system along with the new cryptocurrency could reduce the dependence even more.

In addition, it is assumed that the BRICS cryptocurrency will not be used as a full-fledged settlement tool or digital form of money, but rather as a tool for fixation of obligations and trade facilitation.

The reason for this is that transactions in cryptocurrencies are much slower than conventional banking transactions, so it makes sense to transfer payments between the BRICS countries in cryptocurrency only in order to protect transactions from the influence of the third countries.

Moreover, besides the idea of minimizing the reliance on the US dollar, the BRICS countries are considering alternative technologies to minimize the power of the SWIFT system. It is quite likely that the Russian Financial Message Transfer System (SPFS) might be connected to the Chinese international system of interbank payments CIPS.

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