Russia Proposes New BRICS Financial System to Counter Dollar Dominance
In a strategic move to bolster its economy against ongoing sanctions, Russia has proposed a new cross-border payment system among BRICS nations—Brazil, Russia, India, China, and South Africa. This initiative aims to diminish reliance on the dollar and the Western-dominated financial systems, particularly in light of the sanctions imposed following the Ukraine conflict.
The proposed system includes the establishment of a network of commercial banks that would facilitate transactions in local currencies. Furthermore, it envisions direct connections between the central banks of BRICS nations to streamline financial exchanges. According to a report from the Russian Finance Ministry, these changes are crucial for protecting the participants from external pressures such as sanctions that have targeted Russia since the onset of the war in Ukraine in February 2022.
Additionally, the plan outlines the creation of trading centers for essential commodities, including oil, natural gas, grains, and gold, further promoting intra-BRICS trade without the need for dollar transactions. Russian Presidential Assistant Yuri Ushakov emphasized that this unified financial platform would enhance settlements in national currencies, ultimately reducing trade costs among member states. He noted that the interests of the United States do not always align with those of other nations in the global financial landscape.
To modernize the proposed system, Russia is advocating for the use of Distributed Ledger Technology (DLT), which could revolutionize how settlements are conducted. By implementing this technology, the BRICS nations could potentially save up to $15 billion annually by minimizing intermediary costs and eliminating credit risks tied to the traditional banking system. Despite Russia's challenges with sanctions, other BRICS countries still value access to the dollar-based financial system, which currently accounts for 58% of international payments.
