The BRICS bloc has announced a new payment system for cross-currency exchanges, part of its long-term plan to move away from the dollar.
Russian Foreign Minister Sergey Lavrov announced that the nine-member group is working toward the creation of the new payment system without the integration of the U.S. dollar called BRICS Pay. He added that the new payment system will not only be used to settle cross-border transactions, but also act as a complete financial set-up.
"Many are attracted by the fact that payment systems are being developed within BRICS [that] allows trading investing, carrying out other economic operations without being dependent on those that decided to weaponize the dollar and the euro," said Lavrov.
The foreign minister continued that developing nations will flock to the BRICS payment system in fear of possible sanctions from Washington. "Everyone understands that anyone may face U.S. or other Western sanctions," he said during a meeting with Egyptian Foreign Minister Badr Abdelatty.
Lavrov also slammed the U.S. and Europe for pressing sanctions on countries they don't like, noting that such sanctions prompted BRICS to launch BRICS Pay. Even U.S. Treasury Secretary Janet Yellen has acknowledged that the White House sanctioning developing nations could lead to dedollarization.
BRICS Pay could attract emerging economies if launched, leading to a paradigm shift in the global financial sector. According to Valentina Matviyenko, president of the Federation Council of Russia (FCR), BRICS Pay is on track development-wise. The FCR is the upper house of the Russian legislature, comparable to the U.S. Senate.
"This is no longer just an idea, it is moving forward correctly," she said. According to Matviyenko, BRICS Pay is a response to the aspirations of developing countries wishing to free themselves from the dollar.
BRICS Pay not without obstacles
According to Modern Diplomacy, the issue of BRICS Pay will be tackled during the group's forthcoming summit in October to be held in the Russian republic of Tatarstan. (Related: BRICS alternative currency near realization, American empire death imminent?)
"In pursuit of defining the collective determination to achieve these economic policy goals, BRICS has been deliberating broadly the effectiveness and the importance of its newly designed mechanisms and a well-balanced approach for reconstructing the western-dominated dollar system in the world," the outlet continued.
"BRICS, recognizing the strong working ties among members, has demonstrated its readiness by engaging in consistent dialogue and cooperating with like-minded alliances of partners and international corporate actors."
The implementation of BRICS Pay is not without obstacles, Coin Tribune pointed out. The project will have to overcome several technological challenges, including the integration of each country's existing payment systems. BRICS Pay must be compatible with platforms such as the Unified Payment Interface (UPI) in India and the Mir system in Russia, which will require complex standardization efforts.
"On the geopolitical front, BRICS Pay could alter the balance of economic power. By reducing their dependence on the dollar, the BRICS could weaken the influence of the United States in global trade. However, this initiative also risks provoking increased tensions with Western countries. They may see this approach as a direct threat to the hegemony of the dollar," Coin Tribune continued.
"To achieve its goals, BRICS Pay will have to overcome major technological, geopolitical and regulatory challenges. If these obstacles are overcome, this system could not only transform economic relations among BRICS countries but also redefine global financial balances."
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