BRICS Pay to Go Live Soon, a Big Blow to the US Dollar

JAKARTA – The global financial system is on the cusp of major upheaval. The bloc BRICS plans to create an independent payment system to facilitate cross-border transactions between members. The initiative aims to reduce their dependence on the US dollar by integrating local currencies for trade.

In line with the dedollarization policy, BRICS is actively preparing for the establishment of an independent payment system called BRICS Pay. This system is designed to facilitate cross-border transactions between members without using the US dollar.

The initiative is supported by cutting-edge technologies such as blockchain. It could also be a powerful alternative to the SWIFT network. The Chairperson of the Russian Federation Council, Valentina Matviyenko, ensured that the project is on track. “This is no longer just an idea but is moving forward concretely,” she said as reported by Contribune, Friday (8/23/2024).

He explained that the system is a response to the aspirations of developing countries that want to break away from the hegemony of the US dollar. The main goal of the new mechanism is to allow BRICS member countries to settle their commercial transactions in local currencies.

In this way, they can avoid the fluctuations and economic pressures associated with the American currency. More than 50 countries have expressed interest in joining the initiative ahead of the 2024 BRICS summit in Russia. The majority of them are from Asia, Africa, South America and Eastern Europe.

Geopolitical Challenges

The implementation of BRICS Pay is not without its challenges. The project must overcome several technological challenges including the integration of existing payment systems in each country. BRICS Pay must be compatible with platforms such as India’s Unified Payments Interface (UPI) and Russia’s Mir system, which requires complex standardization efforts.

Geopolitically, BRICS Pay could shift the balance of economic power. By reducing their reliance on the dollar, BRICS could weaken US influence in global trade.

However, this initiative also risks increasing tensions with Western countries. These countries may see this approach as a direct threat to the hegemony of the US dollar. In concrete terms, the BRICS Pay project symbolizes the growing desire of developing countries to break free from the dominance of the dollar and build a more resilient and autonomous financial infrastructure.

However, to achieve its goals, BRICS Pay will need to overcome major technological, geopolitical and regulatory challenges. If these obstacles are overcome, the system could not only transform economic relations between BRICS countries but also redefine the global financial balance.

(nng)