BRICS launches demo of its new payment system

BRICS just dropped the demo of its long-awaited payment system, BRICS Pay. This new payment system is rolling out as the group gears up for their big post-expansion summit in Kazan, Russia, from October 22 to 24.

Russia, this year’s BRICS chair, is pushing hard to break away from the grip of Western-controlled financial systems.

Russian Finance Minister Anton Siluanov called for an alternative to the International Monetary Fund (IMF) to push back against the political power plays from America. BRICS now represents 37% of the global economy, and evidently wants to level the playing field.

BRICS Pay: Breaking down the system

BRICS Pay is being called the cornerstone of payment systems for independent, sovereign nations, according to their official website.

Chinese officials say BRICS Pay will give countries more ways to settle goods and services, strengthening economic ties. And of course it’s designed to help these nations step away from the US dollar.

Financial diversification is the name of the game, and this system is reportedly meant to boost economic independence across the board. BRICS Pay is decentralized and independent, a clear move away from the SWIFT system that Europe uses.

BRICS has been toying with the idea since 2019, trying to build a unified payment system that works for all member nations.

By 2020, the BRICS Payments Task Force was already in motion, and it’s finally picking up speed. During the BRICS Business Forum in Moscow, held at the International Trade Center, participants got a sneak peek at the retail technologies behind BRICS Pay.

The platform is being designed to handle everything from retail payments to remittances.

The push against the dollar

The US dollar has been the top dog for a long time, but that dominance has become a problem for some nations.

Thanks to US sanctions, some countries have been pushed out of the dollar-based system, forcing them to look for other ways to handle payments. BRICS Pay is stepping in to fill that gap.

The payment system could even be used to support other international projects like China’s Belt and Road Initiative (BRI).

As the BRI continues to grow, BRICS Pay might be used as the go-to for settling trade and investment payments.

BRICS added five more members earlier this year: Saudi Arabia, Egypt, the UAE, Iran, and Ethiopia. Russia’s president Vladimiar Putin and China’s president are the ones leading the de-dollarization agenda.

Just the other day, presidential candidate Donald Trump said, “China thinks America is a very stupid country.”

Meanwhile, Putin’s beef with Biden is mainly over Ukraine and the former’s beliefs that America is trying to demoralize the entire world.

The dollar still holds strong — for now

But as of press time, the U.S. dollar is still holding onto its position despite growing opposition and geopolitical chaos.

It remains resilient against other major currencies. The U.S. economy continues to be the top player too, accounting for about 26% of global GDP.

This, combined with the unmatched liquidity of U.S. capital markets, is why central banks still hold large amounts of dollars in their reserves.

About 60% of global reserves are parked in the greenback, and 64% of global debt securities are denominated in dollars. That’s not changing overnight.

The potential political disaster that might arise from the upcoming presidential elections could make the dollar vulnerable, especially if investors lose confidence due to how the losing party reacts.

Analysts and economists are predicting more volatility in the markets and potential disruptions in supply chains.

This instability could force more countries to look for alternatives to the dollar, like the BRICS system, especially if the Federal Reserve starts making unpredictable moves with interest rates.