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BRICS, a collaborative group with five members of major emerging nations – Brazil, Russia, India, China and South Africa – has proposed developing a digital currency for payment transactions between these countries.
The CEO of Russian Direct Investment Fund (RIDF), Kirill Dmitriev, detailed the developing plan on Thursday at the BRICS forum. RIDF is a $10 billion wealth fund of the country created by the Russian government. The announcement was reported by RBC Group, a Russian news outlet.
Dmitriev asserts that members of BRICS plan to develop a singular digital payment system that can settle transactions and payments between the participating countries, with a single cryptocurrency. He further added that the BRICS Business Council has approved of this decision.
Dmitriev, also a member of the council, states that an efficient and operational BRICS system of digital payments will be able to make the process of settlements smoother in national fiat currencies and can further ensure the settlement’s stability, and that of investments between the members of BRICS. The countries of BRICS form more than 20% of the international influx of direct investment from foreign states.
The BRICS countries are using US dollars to reduce the share of settlements. Dmitriev said that the share of US dollar in the area of foreign trade settlements has decreased from 92% to 50%, within the course of the last five years.
Not Hard to Build Cryptocurrency, But Cooperation Is Required
Member of the State Duma’s expert council, Nikita Kulikov, has relayed RBC News that creating a cryptocurrency is not a difficult task; however, it is important to know how the member countries of the coalition will be prepared to use it. Kulikov said that digital currencies are convenient structure for settlements on a multinational level such as BRICS.
Three members of BRICS coalition – Russia, India and China – have also been reported to be looking into finding another payment option to SWIFT (Society for Worldwide Interbank Financial Telecommunication). SWIFT is a US dominated payment system. India, China and Russia hope to ease the trade with countries that are currently under United States imposed sanctions.
SPFS, a major financial messaging system in Russia, is assumed to be related with China’s cross-border interbank system of payment called CIPS. India, on the other hand, plans to connect the Central Bank of Russia’s form with a service that is presently still being built.