New BRICS PAY System: How BRICS Will Reset Global Currency Power : Awake-In-3D
New BRICS PAY System: How BRICS Will Reset Global Currency Power
On January 9, 2024 By Awake-In-3D
In RV/GCR
The BRICS alliance is spearheading an ambitious campaign to reshape the global financial landscape.
Central to their strategy is reducing the longstanding dominance of the U.S. dollar.
The significance of this shift cannot be overstated, as it represents a potential seismic rift in international economic power balances.
De-Dollarization Drive Gains Momentum
After expanding to include ten nations in August 2023, the BRICS alliance has accelerated its efforts to move away from the U.S. dollar.
This involves two key strategies: first, promoting trade in local currencies amongst themselves, thus bypassing the need for dollar-based transactions; second, the development of a BRICS-specific currency, envisioned to directly compete with the U.S. dollar on a global scale.
Founding members Russia and China have been particularly proactive, entering into agreements to conduct bilateral trade in their local currencies.
This strategy is aimed at undermining the U.S. dollar’s role as the primary reserve currency and its dominance in international trade.
The Uphill Battle Against the Dollar’s Dominance
Despite these efforts, the dollar maintains a dominant role in global finance. Its widespread use in international trade, investment, and reserves reinforces its position.
The BRICS’ challenge is formidable; shifting away from a currency that is deeply embedded in global financial systems requires not just creating alternatives, but also convincing global actors to adopt these alternatives, which could be more costly and less efficient.
Limited Financial Influence Due to Western Institutions
Though the BRICS countries collectively account for a significant portion of the world’s production and consumption in various sectors, their influence in global finance remains limited.
This discrepancy is largely due to the control the U.S. and its allies hold over key financial instruments and institutions.
For example, the U.S. dollar continues to play a major role in global currency and credit markets, international trade invoicing, and forming official foreign exchange reserves.
Moreover, the U.S. retains considerable influence in major global financial institutions, like the International Monetary Fund (IMF) and World Bank.
BRICS PAY: Revamping the International Payment Infrastructure
The BRICS nations are not just looking to create an alternative currency but also to overhaul the international payment infrastructure.
The proposed BRICS PAY system aims to integrate traditional payment systems with innovative financial technologies, including central bank digital currencies and decentralized finance.
This system’s goal is to facilitate direct exchanges between national currencies of member states, eliminating the need for intermediary conversion into U.S. dollars.
This would reduce transaction costs and processing times, making trade within the BRICS bloc more efficient.
Read: What is the BRICS Pay initiative?
Currency Fairness for Global Financial Equity
The BRICS nations are also focused on creating a fairer global financial system. Their objective is to develop a framework for mutual settlements in their own currencies, which would help redistribute international financial flows more equitably.
This approach aims to correct structural imbalances in the global economy, where the current system disproportionately benefits developed nations at the expense of emerging markets.
By enabling settlements in their own currencies, BRICS nations hope to channel financial resources into priority industries and reduce their economic dependence on the dollar.
Bottom Line
The BRICS countries’ concerted push towards a de-dollarized world represents a bold attempt to redefine the global financial order.
This initiative, while fraught with challenges, has the potential to significantly alter the landscape of international finance, marking a shift from a U.S.-centric system to a more multipolar financial world.
Supporting articles:
BRICS to Eliminate US Dollar Financial System in 2024 – Watcher Guru
Can BRICS De-dollarize the Global Financial System? – Cambridge
Visualizing the BRICS Expansion in 4 Charts – Visual Capitalist
BRICS in Global Financial System: The Need to Level the Playing Field – Modern Diplomacy
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