On Tuesday, the BRICS bloc, with Russia leading the pack, announced a groundbreaking move: the launch of a new payment system built on the foundation of blockchain and cryptocurrency technologies. This new system aims to function as an independent channel for conducting trade settlements, positioning itself as a formidable contender to the traditional dominance of the US dollar in global transactions.
The ambition behind this initiative is to create a payment system that is accessible and beneficial to all levels of society, from government entities to the average person on the street. This inclusivity could significantly impact a broad spectrum of society, offering a range of benefits across various hierarchies if the system achieves its intended success.
Yuri Ushakov, a Russian diplomat, provided insights into the technical prowess of the proposed system, highlighting its incorporation of digital assets and cryptocurrencies into the blockchain. This innovative approach suggests a system not only advanced in its technological underpinnings but also versatile in its application, capable of supporting a wide range of transactions.
The strategic implications of this move are profound, signaling a potential shift in global financial power dynamics. By facilitating cross-border transactions within the BRICS nations and extending this capability to other developing countries, this new payment system could challenge the hegemony of the US dollar. Such a challenge could lead to a decrease in both the demand for and the global dominance of the US dollar, with potentially significant impacts on the US economy and beyond.
Ushakov elaborated on the broader ambitions of the BRICS bloc, emphasizing the aim to enhance its global presence within the financial system. This payment system is envisioned as a key step toward establishing a more significant role for the alliance on the world stage, advocating for a future where financial transactions are more accessible, cost-effective, and insulated from political influence.
While the exact timeline for the launch of this system remains under wraps, anticipations are high for its unveiling, possibly during the 16th summit scheduled for October this year. The significance of this development is implied by the expanding membership of the BRICS, which now includes nine countries, with Saudi Arabia also considering joining. This expansion has amplified the bloc’s influence over global commodities like oil and its collective share of the global GDP.
Russian President Vladimir Putin provided a forward-looking perspective, predicting that the BRICS nations, including the new members, could command a substantial 37% of the world’s GDP by 2028. This projection starkly contrasts with the anticipated decline of the G7 bloc’s share to below 28%, suggesting a pivotal shift in economic power from the West to the East.
The trajectory of economic growth within the BRICS countries lends credence to these projections. India’s economy, for instance, is on the brink of surpassing the $4 trillion mark, with its growth rate positioning it to overtake traditional economic powerhouses like Germany and Japan in the near future.