You've probably heard some talk of "de-dollarization", or the push to conduct more international trade and financial transactions in currencies other than the US dollar. Well, BRICS — the expanding bloc of major emerging and developing economies — is a leading force in aiming for exactly that.
It's preparing to launch its own cross-border payment system — BRICS Pay. BRICS finance ministers and central bank officials met in Jaipur, India, in August to advance the project. BRICS Pay is expected to become partly operational in September.
How will it work?
Right now, if you want to make a payment between Nigeria and the Democratic Republic of Congo, that payment information typically passes through the Belgium-based SWIFT organization.
More than 11,000 financial institutions worldwide access SWIFT, and it works well. But some critics point to one major downside: A network of its kind can be used as a tool of geopolitical pressure. So, in times of conflict, entire countries can be cut off from the critical financial network that is an important point of leverage for Western sanctions.
BRICS Pay would connect national payment systems, meaning trade between two BRICS nations could take place via without the dollar serving as an intermediary.
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