Excitement Grows Ahead of 2024 BRICS Summit in Kazan
The much-anticipated 2024 BRICS summit is scheduled to occur from October 22 to 24 in Kazan, Russia. As the event approaches, speculation is intensifying regarding the details of the anticipated BRICS digital currency and payments network.
While specifics have been limited, Deputy Chairman of the State Duma, Alexander Babakov, provided some insights in late September. In an interview with the Ria Novosti newspaper, he suggested that BRICS might leverage blockchain technology and digital currencies for intra-bloc transactions. Babakov described a BRICS payment system as essential for achieving “economic sovereignty and independence.” His recent remarks have fueled speculation, indicating there may be more substantial developments on the horizon.
The Push for De-Dollarization
The momentum for alternative payment systems and de-dollarization has escalated in response to extensive sanctions imposed by the United States on Russia following its invasion of Ukraine. After incurring losses of $300 billion in reserve assets, Russia has become the most sanctioned nation globally, yet its economy continues to grow in terms of purchasing power parity.
Additionally, former U.S. President Donald Trump’s trade war with China and the ongoing tariff disputes between China and the European Union have further propelled BRICS’ efforts toward economic independence. This situation reflects a broader trend of the world dividing into distinct economic spheres, marked by increasing distrust.
However, the transition away from the dollar is not immediate. China still possesses $3.28 trillion in reserves and $767.4 billion in U.S. Treasury securities. Despite Mexico becoming the largest trading partner of the U.S. in 2023, China maintains substantial trade ties with the U.S., amounting to $575 billion annually.
Nonetheless, internal settlements within BRICS using national currencies exceeded those in USD as of September 2024. Although the de-dollarization process is gradual, it is steadily progressing toward its goal.
Blockchain Technology and Peer-to-Peer Settlements
Projects like mBridge have demonstrated how blockchain and tokenized currencies can significantly expedite settlements between central banks. While U.S. sanctions prevent Russia from participating in such systems, the potential for a similar system within BRICS remains viable.
Blockchain technology can facilitate peer-to-peer payments across various entities with minimal fees. Although BRICS trade balances are settled periodically, the adoption of blockchain and digital currencies could enable real-time settlement.
The proposed BRICS payment system aligns with a larger trend of utilizing blockchain, digital ledgers, tokenized currencies, and Central Bank Digital Currencies (CBDCs) to disrupt the current financial landscape. While nations and businesses may still hesitate to engage with Russia due to fears of secondary sanctions, this new system could make inter-BRICS transactions more efficient, cost-effective, and less susceptible to external interference.
Will the BRICS currency and payment system be unveiled in Kazan later this month? If Babakov’s remarks are any indication, significant developments may be on the way, and the world will soon get a glimpse of what’s in store.
