Russian diplomat Roman Babushkin confirmed that BRICS is developing a new payment system to end reliance on the U.S. dollar. The new payment mechanism will use local currencies for cross-border transactions and mutual settlements among BRICS members. The development aligns with the changing global dynamics and fosters the growth of the BRICS member’s respective local currencies.
Babushkin also refuted Brazilian President Lula de Silva’s comments about forming a new BRICS currency to challenge the U.S. dollar. The Russian diplomat admitted that creating a new currency comes with a lot of complexities, and the bloc is not prepared for the drastic development. The formation of the BRICS currency is challenging as it involves intricacies and is difficult to translate into reality.
“A BRICS payment instrument based on the currency basket would help to carry out mutual settlements without any reliance on the US dollar,” he said. However, he cautioned that creating a new currency needs more work and research, and the alliance is not prepared for it yet. “These ideas demonstrate new tendencies; however, it’s clear that a lot of aspects require in-depth study,” he said.
Babushkin explained that the payment system will provide seamless mutual settlements among the member countries. He added that BRICS will soon liberate itself from the U.S. dollar and end dependence on it.
“With over one-third of the world’s GDP, a total population of around 3 billion people, and a strong desire of other states to join its activities, it is safe to say that BRICS has become an integral element of an evolving multipolar paradigm,” he said.
BRICS Challenges The U.S. Dollar
The BRICS bloc is also convincing other countries to ditch the U.S. dollar and begin trading in local currencies. If the new payment system gains momentum, many other developing countries could settle trade without the U.S. dollar. Read here to know how many sectors in the U.S. could be impacted if the USD is not used for trade on a global scale.
BRICS is an acronym for Brazil, Russia, China, India, and South Africa. The summit will be held on August 22 to 24 in Johannesburg. Read here to know what will be discussed at the summit for a better understanding.