Russia, China plan to counter dollar dominance with BRICS payment system

Russia and China have proposed the setting up of an independent BRICS payment system using digital and blockchain technologies, in a move to end the dominance of US dollar in global payments.

Besides Russia and China, the BRICS bloc of countries include Brazil, India and South Africa

The five-nation BRICS group is moving ahead with their efforts to create a payment system independent of the dollar and other hard currencies, TASS reported citing Kremlin aide Yury Ushakov as saying said in an interview. 

The aim is to create a cost-effective, state-of-the-art payment system using digital technologies and blockchain so as to make it convenient for governments, common people and businesses, devoid of political overtones, he said.

Leaders of BRICS countries, in their 2023 Johannesburg Declaration, envisaged increased use of national currencies in trade settlements bypassing the dollar so as to strengthen these currencies.

China has long been trying to position its currency Yuan as a global currency by eliminating the use of dollar for international settlements. 

Russia, on the other hand, has been facing the heat of western sanctions that blocked the current payment and settlement channels for its Ruble.

Blockchain, being a decentralized network, helps simplify transactions using different currencies on a real-time basis.

While Ushakov reaffirmed the goal to increase the group's role in the international monetary and financial system, details of the BRICS payment system are yet to emerge.

For the present, however, central banks of BRICS countries have agreed to develop a Contingent Reserve Arrangement (CRA) to tide over currency crises – a move that would challenge the role of the International Monetary Fund (IMF).