BRICS member Russia confirmed that the alliance is looking to create an independent payment system for trade settlements. The new payment mechanism will be used to settle foreign transactions and will be similar to the SWIFT messaging system. The US dollar will not be incorporated into the payment system and will be run on local currencies only.
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Trade and cross-border transactions worth billions of dollars in local currencies could be used to settle in the new BRICS payment system. The lesser the US dollar gets used, the more deficit it could face in the global markets. The US imports the dollar to fund its surplus and if emerging nations don’t buy the USD, problems could hit the American markets.
Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. The move could lead to hyperinflation in the US as the dollar could face deficits due to lesser or non-usage. Prices of daily essentials could surge leading to job losses and turmoil in the stock and commodity markets.
Also Read: BRICS Currency: 40% Could Be Tied to Gold, 60% in Local Currencies
BRICS: Independent Payment System For Global Trade On the Cards
BRICS country Russia revealed that they are configuring a foreign trade settlement in service to other member nations. The mechanism will take the entire load of foreign trade and will use local currencies for settlements. This will boost the economies of member nations and strengthen both private and state-run businesses.
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“We are working within the framework of cooperation with BRICS countries on creation of our own payment and settlement configuration, which will create conditions for efficient and independent servicing of the entire foreign trade,” said Russian President Vladimir Putin, at the Energy Week Forum. The new payment system will also be discussed at the upcoming summit in October 2024 for additional inputs from member countries.