Digital payment systems between countries have become a topic of hot discussion between BRICS+ finance ministers who are arguing that these cannot be “used as a weapon of political and economic pressure”.
BRICS+ finance ministers and central bank governors have met in Sao Paulo, Brazil to discuss alternatives.
Russia, currently the BRICS+ Chair, has faced international sanctions due to the war in Ukraine.
Countries are linked through digital payment systems, which are essential for financial transactions between them, and Russia has been affected.
The BRICS+ ministers have therefore agreed that by the end of the year, Russia will produce a report on the options for a new international financial system.
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One of the initiatives could be a BRICS+ Bridge platform.
Russian media network Sputnik International has quoted Finance Minister Anton Siluanov as saying that his country is ready to test digital currencies with China, the Eurasian Economic Union and the Gulf countries.
However, there are no specific details.
Currently there is mBridge, the cross border Central Bank Digital Currency platform.
The CBDC was developed by four central banks, including BRICS+ members China and the UAE.
The UAE is one of the five new members who joined last year.
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However, while there are options available, not all BRICS+ countries are in agreement.Reports say the South African ambassador to Russia, Mzuvukile Jeff Maketuka, has told his counterparts that his country would prefer an African payment system that provides opportunities for trade with global partners.
The system or perhaps systems therefore need to be worked out and agreed to, along with a currency.
The dollar has been the dominant currency globally for many decades.
But talks are underway for another currency, including China’s renminbi to be used.
There has also been talk of a common Brics currency to be developed, but this remains just that: talk.
Russia has also suggested the currencies of India or the UEA be used in a common payment system.
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There could also, however, be a common unit with a value where a country’s currency is traded against.
This would be held by an overall financial body.
The exact details still need to be worked out and are set to be discussed later this year.
The aim of such a system is to make sure that payments proceed across borders and are not hindered by geopolitical changes or conflict.
This will be a welcome relief for businesses wanting to thrive independently of what is happening around them.
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