As a seasoned analyst with over two decades of experience observing global economic dynamics, I find the emergence of the BRICS Payment System and the potential shift towards de-dollarization intriguing. The complexity of this situation mirrors the intricate dance of nations on a geopolitical chessboard, a dance I’ve been following for years.
In the two weeks leading up to the launch of the new BRICS Payment System, an impressive 159 countries have expressed interest in adopting it, potentially threatening the dominance of the SWIFT banking system favored by many nations, particularly the United States. Many countries suspect that America has been using the SWIFT system as a weapon against those who are not on good terms with the U.S., leading to calls for de-dollarization. Furthermore, bloc nations are considering the application of blockchain and cryptocurrency technology for cross-border transactions, with Russia taking the lead in this initiative.
BRICS Payment System and De-Dollarization
In July last month, the BRICS nations unveiled their own payment system as a substitute for SWIFT, which is primarily used by America. Their intention is to modify international trade structures with this new system. Notably, this system enables cross-border transactions and payments without depending on the US Dollar. This action could potentially rebalance economic power in global markets.
According to recent updates, numerous countries have pledged their backing for the recently introduced BRICS payment system. A high-ranking Russian figure has disclosed that approximately 159 nations have expressed interest in adopting this system.
There’s been chatter suggesting that the nation bloc might present a currency backed by gold at the BRICS Summit in October 2024. Additionally, these countries may explore the use of their local currencies for cross-border transactions over a blockchain system, as a means to challenge SWIFT’s influence.
Will the Bloc Use Blockchain and Crypto?
Despite considering the establishment of a BRICS Payment System, it’s likely to face challenges in displacing the US Dollar’s dominance, particularly when dealing with Western countries. Moreover, as the bloc grows, managing multiple local currencies for international trade could become problematic. As reported earlier this year by the Tass News Agency, a Kremlin advisor Yury Ushakov stated:
“It’s crucial for us to aim at establishing a self-reliant payment system within BRICS, leveraging cutting-edge technologies like digital platforms and blockchain. Our focus should be on making it user-friendly for governments, individuals, and businesses alike, while ensuring affordability and political neutrality.”
Cryptocurrencies could serve as a robust connector among block nations and international traders dealing with Western countries. Digital assets function as a global conduit, transcending political boundaries. Even major Western nations have shown an inclination towards adopting cryptocurrencies; for instance, former President Donald Trump has expressed plans to establish Bitcoin as the primary reserve currency in the United States.
Over the past week, President Vladimir Putin of Russia endorsed a legislation regarding cryptocurrency, enabling mining activities within the nation and facilitating cross-border transactions using digital currencies. In response to intensified U.S. sanctions after the Ukraine conflict, there has been a significant surge in Russia’s adoption of crypto assets.
It’s intriguing to consider if other countries in the BRICS group might share a preference for cryptocurrencies, given that China has held a negative stance on them for quite some time.
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2024-08-17 09:02