At the BRICS 2024 Summit in Kazan, Russia, the leaders of the member countries reaffirmed their commitment to creating an independent global financial system based on their national currencies.
In response to global challenges related to unilateral coercive sanctions, BRICS initiated an ambitious project called BRICS Clear, an independent cross-border payment system based on national currencies. According to VOA, the proposal, which was put forward by the Russian Federation prior to the summit, aims to build an alternative financial infrastructure that allows for wider circulation of national currencies.
By supporting inclusive cross-border payment instruments, BRICS countries will actively promote the increased use of local currencies in financial transactions among member states as well as with their trading partners. This move reflects a collective effort to create a more balanced and sustainable international financial system while reducing dependence on the US dollar, which dominates about 90% of global trade volume.
Despite the technical and regulatory differences that need to be addressed, Bloomberg reported that efforts to integrate payment systems among BRICS countries have the potential to increase trade volume among member nations by 5% to 7%.
A Call for Change
Vladimir Putin opened the expanded BRICS summit with a call for an alternative international payment system to prevent the dominance of the U.S. dollar. However, the summit communiqué indicated little progress in this area, with Putin stating that while there are problems with cross-border payments, there are no plans for a dedicated system as the existing infrastructure is considered sufficient.
Putin acknowledged that payment delays with key partners such as China and Turkey, caused by pressure from Western regulators, have become obstacles for Russian companies and banks. He stressed that the existing financial messaging systems of the Russian Central Bank and BRICS could be used to facilitate mutual payments in local currencies.
Concerns about Dollar Dependence
At the summit in Kazan, Russia, Putin expressed that the dollar is being used as a weapon, stating, “The dollar is being used as a weapon. We really see that this is so. I think that this is a big mistake by those who do this." He also mentioned that almost 95% of trade between Russia and China is now conducted in rubles and yuan.
In response to this situation, Russia is working to create a payment infrastructure that can operate outside the SWIFT system, which is based in Belgium. This de-dollarization initiative is considered one of the most concrete proposals to come out of the summit.
However, efforts to reduce dependence on the dollar have raised concerns among some BRICS members, particularly Brazil and India, who fear that this rapidly expanding club could appear pro-China and anti-Western.
