“We are concerned that global financial and payment systems are increasingly being used as instruments of geopolitical contestation, Global economic recovery relies on predictable global payment systems and the smooth operating of banking, supply chains, trade, tourism as well as financial flows.” – said Cyril Ramaphosa, President, South Africa
BRICS, the group of nations that includes Egypt, Ethiopia, and South Africa is set to establish an independent payment system built upon digital currencies and blockchain technology, according to Kremlin aide, Yury Ushakov, in an interview with TASS.
“We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain. The main thing is to make sure it is convenient for governments, common people and businesses, as well as cost-effective and free of politics,” he said.
Ushakov further highlighted that the specific objective for 2024 is to enhance the influence of BRICS in the global monetary and financial system.
He emphasized that the leaders, as outlined in the 2023 Johannesburg Declaration, have prioritized the focus of BRICS countries on expanding settlements in national currencies and bolstering correspondent banking networks to ensure the security of international transactions.
The Declaration stated:
We task our Finance Ministers and/or Central Bank Governors, as appropriate, to consider the issue of local currencies, payment instruments and platforms and report back to us by the next Summit.”
The members of the community are already working on various cross-border initiatives including some that involve digital currencies, which could impact the trajectory of intra-trading within the bloc.
For instance, both China and new entrant UAE are engaged in the MBridge platform, which facilitates cross-border payments using digital currency in partnership with the Bank for International Settlements (BIS). Additionally, there have been speculations about Russia and Iran collaborating on the development of a digital currency initiative.
Both India and the UAE have recently unveiled intentions to collaborate on initiatives involving cross-border Central Bank Digital Currencies (CBDCs). Meanwhile, they are concurrently intensifying efforts to enhance the utilization of their respective local currencies in cross-border transactions.
The Abu Dhabi National Oil Company (ADNOC) and the Indian Oil Corporation Limited (IOCL) successfully carried out their inaugural transaction involving a million barrels of oil under the Local Currency Settlement (LCS) framework.
This mechanism is aimed at diminishing fees and expediting settlement times by circumventing the multi-day delays often associated with transactions involving U.S dollars.
As BRICS’ de-dollarization mission continues in 2024, investment management company BlackRock has issued a major warning about the US Dollar. The company is warning investors with cash in reserve to start moving some of it into bonds.
According to a report, the bond market has seen some volatility amid the uncertainty around interest rates and the Federal Reserve’s monetary policy. On Friday, the 10-year Treasury yield briefly fell below 4.5%. The drop came following a weak jobs report for April and a surprise tick higher in unemployment rates.
The US Dollar has had a tumultuous 2024, in part due to BRICS intervention. The bloc is actively looking to ditch the US dollar and influence other countries to do the same. With the latest warning by BlackRock to secure your US dollars another way, it’s clear that the alliance’s mission is succeeding. Inflation and interest rate hikes only further helped the de-dollarization initiative.
Stephen Gums
AFRICANPARROT TV.