BRICS payment system aims to de-dollarize using blockchain technology

BRICS Payment System: 159 Countries Question SWIFT

With the launch of the new BRICS payment system just two weeks ago, 159 countries have expressed interest and willingness to adopt it, challenging the famous American banking system SWIFT. Many countries believe that America is using SWIFT against countries that do not have good relations with the United States, and thus seeks to de-dollarize. The bloc countries are also considering using blockchain and cryptocurrencies for cross-border payments.

BRICS Alliance: A New Balance of Power Against SWIFT and the US Dollar

In July, the BRICS nations announced their own payment system as an alternative to the US-based SWIFT system in a bid to reshape global trade. Allianz said the new payment system would facilitate cross-border transactions and settlements without relying on the US dollar. The move could change the balance of economic power in global markets.

According to recent reports, several other countries have expressed support for the new BRICS payment system. A Russian official confirmed that about 159 countries want to adopt the system.

It is being discussed that the bloc of nations could introduce a gold-backed currency at the upcoming BRICS summit in October 2024. Additionally, countries could also use local currencies for cross-border payments via the blockchain platform to counter SWIFT’s dominance.

Blockchain and cryptocurrencies as a path to independence from the US dollar?

Although the bloc is considering using the BRICS payment system, replacing the dominance of the US dollar will not be easy, especially in trade with Western powers. And even as the bloc of nations expands, there will be plenty of local currencies that can be used in international trade.

Earlier this year, Kremlin adviser Yuri Ushakov told the news agency: Tas:

We believe that the establishment of an independent payment system for BRICS countries is an important goal for the future, which will be based on advanced tools such as digital technologies and blockchain technology. More importantly, it will be convenient, cost-effective and policy-free for governments, citizens and businesses.

Cryptocurrencies can serve as a powerful bridge between the BRICS nations and international traders in Western countries. Digital assets provide global connectivity, regardless of political affiliation. Even Western countries have shown interest in cryptocurrencies, with leaders like Donald Trump promising to make Bitcoin the US reserve currency.

Last week, Russian President Vladimir Putin signed a cryptocurrency law that allows cryptocurrency mining in the country as well as the use of cryptocurrencies for cross-border payments. Amid heavy US sanctions following the invasion of Ukraine, the use of crypto assets has increased in Russia.