The BRICS alliance comprising Brazil, Russia, India, China, and South Africa—has been increasingly proactive in pursuing collective economic goals. Its new payment system has been designed to operate independently of the U.S. dollar and the SWIFT network. With interest from over 159 countries, it marks a major step towards de-dollarization and financial sovereignty, with a broad global impact.
Elvira Nabiullina, Russia’s Central Bank Governor, has emphasized the system’s potential as an alternative to SWIFT with ongoing discussions to integrate it with similar platforms in other countries
The BRICS payment system will be a key topic at the BRICS 2024 Summit in October in Kazan, Republic of Tatarstan. Viktoria Panova, head of Russia’s BRICS Presidency Council, highlighted its role in enhancing cooperation among BRICS nations and supporting a multipolar financial order.
The BRICS payment system could quickly benefit the bloc, especially as more nations join, strengthening the bloc’s economic influence and reducing global reliance on the U.S. dollar. The drive for de-dollarization gained momentum after Western sanctions were imposed on Russia, highlighting the vulnerability of relying on the dollar and SWIFT. By promoting local currencies and alternative settlement methods, BRICS aims to insulate itself from similar economic pressures in the future.
The BRICS payment system, a viable alternative to SWIFT and modelled after Russia’s System for Transmitting Financial Messages (SPFS) is the key component of this strategy. BRICS Bridge, the payment platform transaction will be in the national currencies of the member states, with the New Development Bank (NDB) acting as a platform for integration, conversion, and clearing.
This system supports the bloc’s de-dollarization agenda by enabling member states to make settlements in local currencies, reduce exposure to Western economic sanctions, and enhance their financial sovereignty. Developing countries in the Global South, vulnerable to dollar fluctuations and U.S. monetary policy will benefit significantly.
Over 30 countries are interested in joining BRICS, but integrating new members presents opportunities and challenges. Russian Foreign Minister Sergey Lavrov has emphasised the need for careful deliberation on accession modalities. The summit in Kazan will likely address these issues and the implications for the alliance’s long-term goals. As Jim O’Neill, the economist who originally coined the term “BRICs,” has pointed out, BRICS expansion should follow clear criteria to maintain the bloc’s cohesion and effectiveness.
The bank, which has already welcomed Bangladesh, the United Arab Emirates, Uruguay, and Egypt, must now determine how to integrate new members into its operations. As the NDB evolves, its effectiveness in supporting BRICS’ goals of de-dollarization and sustainable development will be closely examined. The NDB, an alternative to institutions like the International Monetary Fund (IMF) and the World Bank, plays a critical role in the BRICS economic agenda. It has focused on funding infrastructure and sustainable development but faced scrutiny over its low profile and limited investments.
As BRICS advances its de-dollarization strategy, the NDB will serve as its central hub, facilitating transactions and integration across member states. Additionally, the NDB will promote the use of local currencies, reducing reliance on the U.S. dollar.
However, the NDB faces significant challenges. Scholars like Gregory T. Chin have expressed concerns about the bank’s governance and agenda, questioning whether it has fulfilled the original vision of its founders. As the NDB seeks to expand, it must also address these concerns by adopting a more proactive and ambitious approach to its operations.
As the global economy becomes increasingly digital, BRICS must navigate the complexities of digital markets and establish a regulatory framework for digitalization, particularly for antitrust regulation and consumer protection.The digital economy offers BRICS opportunities for growth and efficiency but also presents regulatory challenges, especially in fair competition. Balancing innovation and regulation will be crucial for advancing the digital economy.
By leveraging digital technologies, the BRICS payment system could facilitate faster and more secure transactions, reducing the bloc’s reliance on traditional financial networks. Achieving this goal will require substantial investment in digital infrastructure and regulatory frameworks. With BRICS offering an alternative to the U.S. dollar and the SWIFT network, it is challenging the status quo and asserting its economic independence. The system’s impact on global trade and finance is immense, particularly as more countries seek to join the bloc and adopt its new financial architecture. However, the success of the BRICS payment system will depend on several factors, including the readiness of member states to implement the system, the integration of new members, and the ability of the NDB to support the bloc’s broader economic goals.
In the coming months, the decisions made by BRICS leaders will have far-reaching implications for the global economy. If successful, the BRICS payment system could pave the way for a more diversified and resilient financial landscape, reducing the dominance of the U.S. dollar and giving rise to a new global financial order.
(The writer is a senior journalist based in Islamabad. Views personal)
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