In a major blow to the U.S. dollar’s dominance in global finance, 20 nations have joined the BRICS payment system. The Russian-backed payment system allows member nations transactions without relying on the Western-backed SWIFT network.
The move reflects a growing dissatisfaction with the current financial order and a desire to diversify away from the dollar.
The BRICS payment system was launched by Russia in 2014 as a response to the threat of US sanctions that could cut off access to SWIFT. Since then, the system has attracted over 159 participants, including banks, corporations, and government agencies from various countries.
The system is compatible with SWIFT and can process payments in multiple currencies, including the national currencies of the BRICS founding members: Brazil, Russia, India, China, and South Africa.
The 20 nations that have recently joined BRICS include Iran, Turkey, Venezuela, Argentina, Bolivia, Ecuador, Cuba, Nicaragua, Sudan, Syria, and several African countries.
By joining the BRICS, these countries hope to gain more autonomy and flexibility in their trade and financial relations, as well as to benefit from the growing economic clout of the BRICS bloc.
China’s CIPS is Also Challenging the Dollar Status as the Global Reserve Currency
China, a member of the BRICS group, has also developed its own Cross-Border Interbank Payment System (CIPS), which facilitates transactions in Yuan and other currencies.
The CIPS is linked to the Russian SPFS, creating a network that covers most of the emerging markets and developing countries.
BRICS countries have also established a new international bank called the New Development Bank (NDB). The multilateral lending institution aims to support infrastructure and sustainable development projects in the Global South.
The growing BRICS movement signals a shift in the global financial architecture, where the dollar is no longer the sole reserve currency.
The BRICS countries and their allies are asserting their economic sovereignty and creating a more inclusive financial world.
The transition from the dollar to BRICS currencies is not without limitations. It poses challenges and uncertainties, as the dollar still enjoys unparalleled liquidity and stability.
Moreover, the U.S. and its allies may not easily relinquish their financial supremacy. Consequently, the future of the global financial system will depend on how these competing forces and interests will interact and cooperate in the coming years.