Russia is reeling under monetary pressure due to sanctions and is pursuing alternative financial systems such as the International North-South Transport Corridor (INSTC) and BRICS Bridge to circumvent economic isolation, according to a report from AA News.
Apart from sanctions, the geopolitical tensions from the US and Europe have disrupted the traditional trade routes to Russia. To bypass the losses, Russia is diversifying its trade towards the Middle East and Asia. It is also looking at the BRICS Bridge, a system that connects the central bank digital currencies among member nations.
The new pivot also comes through the INSTC route, a 7,200-kilometer sea, rail, and road network that connects Russia to India via Iran. This is an alternative route from the Suez Canal and also shortens the distance by about 40%. Therefore, the shipment time that used to take 45 days can be completed in 25 days. Russia is also looking to develop the BRICS Bridge to protect its economy from Western pressure.
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Can Russia Succeed With the BRICS Bridge?
The BRICS Bridge is a blockchain-based platform and has reached an advanced pilot stage. Members like Russia, China, India, UAE, Brazil, South Africa, and Iran, among others, are working towards the formation of CBDC’s. This system eliminated the need to use the US dollar as it directly corresponds with banks, enabling peer-to-peer transfers. The central bank digital wallets will be at the crux of the usage, which can reduce transaction costs by 40%.
Russia’s ambitious INSTC and BRICS Bridge strategies come when its economy is facing significant headwinds. While the INSTC could come in handy, the BRICS Bridge is moving slowly among the members. The Reserve Bank of India (RBI) had proposed that all members link their CBDC’s to one currency for trading. This topic will be discussed at the upcoming summit in India’s New Delhi.