BRICS Explores Digital Currency and Alternatives to US Dollar Dominance

In a move to reduce reliance on the US dollar and assert greater economic independence, the BRICS bloc, comprising Brazil, Russia, India, China, and South Africa, is exploring the use of digital currencies and alternative financial systems. Russian President Vladimir Putin has outlined the group's cautious approach, emphasizing the need for gradual progress and the establishment of reliable financial infrastructure that is independent of Western-dominated platforms.

Charting a New Financial Course for the Global South

Cautious Approach to a BRICS Currency

President Putin has stated that the time is not yet ripe for a common BRICS currency, citing the differences in the structure and quality of the economies within the group. Instead, the focus is on the use of national currencies, new financial instruments, and the creation of an alternative to the SWIFT international payment system. The BRICS nations are exploring the possibility of expanding the use of national currencies and developing secure electronic instruments for settlements and transactions.

Exploring Digital Currencies and Blockchain-based Payment Systems

Alongside the push for greater use of national currencies, the BRICS bloc is also delving into the realm of digital currencies. Putin revealed that the group is working on a SWIFT-like financial messaging system and exploring the use of national digital currencies in financing high-growth investment projects. Additionally, the BRICS are preparing to launch the BRICS Pay platform, a blockchain-based payment system aimed at facilitating cross-border transactions within the alliance.

Reducing Reliance on the US Dollar

The BRICS countries' efforts to create alternative financial systems and reduce their dependence on the US dollar are driven by a broader strategy to assert greater economic independence and challenge the dominance of Western-led institutions. Putin noted that the volume of the US dollar in settlements and reserves is declining, even among traditional US allies. He suggested that the United States should consider the negative impact of its continuous sanctions on Russia, which have contributed to the erosion of trust in the US dollar.

India's Pragmatic Approach

While countries like Russia and China are actively pursuing a de-dollarization agenda, India has taken a more pragmatic stance. External Affairs Minister S. Jaishankar has made it clear that India has no plans to end its reliance on the US dollar and will continue to use the currency for trade and transactions where it remains a necessary form of payment. India's position is that it has not actively targeted the US dollar as part of its economic, political, or strategic policy.

BRICS Expansion and Growing Economic Clout

The expansion of the BRICS group with the addition of Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates has further strengthened its economic and geopolitical influence. The BRICS now accounts for half of the world's population, 38% of the global GDP, and 40% of global trade. This growing economic clout has prompted the group to push for reforms in global governance and the creation of parallel institutions to challenge the established Western-led order.As the BRICS nations navigate the complex landscape of international finance, their cautious yet determined approach to developing alternative financial systems and reducing reliance on the US dollar could have far-reaching implications for the global economic order.