BRICS New Currency and Payment System- The BRICS Bloc Including Pakistan

The BRICS countries are keen to develop alternative economic and trade systems that will not be dependent on the current US-dominated global framework. They have already established such institutions as the New Development Bank and the Contingent Reserve Arrangement that are aimed at stimulating South-South exchanges and decreasing reliance on conventional sources of finance.

However, the world is far from a BRICS common currency. Building a viable alternative to the dollar hegemon is difficult and Long-sighted forethought is imperative.

BRICS New Currency

The chances of BRICS currency succeeding will turn the tables very rapidly and will replace dollar unilaterally. It will not only increase the intra trade volumetrics of the bloc but rebrand the narrative as well, that of the Global South. It will also bring in more countries that will do not want to do business in the US-centric economy to shift their trade investments.

On the contrary, this kind of idea has its own risks. The idea of a BRICS currency replacing the dollar remains a far stretch for many experts. Also, the harsh reality of using a new currency could prove difficult to swallow for many. The BRICS economies are dispersed across several dimensions of geography, religion, structure and fully complement each other One major reason there has been practicality and common sense to currencies is due to the history, geographical location and economic structure countries have been built on.

One possible solution is the development of a BRICS payment system that can order the transactions like SWIFT does. The New Development Bank could act as a settlement and, the transactions will be carried out in the currencies of the member states. This is an important step forward, but it will work only if the rest of the BRICS nations do the same. However, the BRICS bloc is actively moving towards the achievement of its goal which is the setting up of a new currency. The members of the bloc are also buying more and more gold which will increase the value of the new currency and make it easier for it to become a reserve currency. BRICS New Development Bank of Currencies The BRICS Currencies bloc is a strong economic force in the world. However, approaching the BRICS Currencies there are many issues that need to be worked on such as internal issues on how to further strengthen relationships and create more of its own institutions. In spite of these challenges, the group is broadening its influence and deepening political and economic penetration. While some analysts are concerned that BRICS may be the beginning of a threat to the US government worldwide, others consider it an opportunity that should help encourage growth in the world economy.

President Vladimir Putin’s comments regarding the introduction of new global currencies by BRICS countries were made during the 14th BRICS summit in mid-2022. Such a move would not only signify a break from the current order however, it could also mean the end of the US dollar’s supremacy. However, the preposition has received a backlash from some of the members. Furthermore, the establishment of new BRICS currency would be a challenge due the vast economic disparities within the member nations.

However, the BRICS countries have signed up to the project of establishing a new mechanism for international financial activity. They have already devised several international financial instruments including BRICS New Development Bank, the Contingent Reserve Arrangement, and BRICS Trade Facilitation Initiative. The NDB headquartered in Shanghai China had a strong AA+ credit rating from S&P and Fitch. It is also a major provider of loans to third world countries. Its membership is increasing with South Africa and India likely to join in 2024. This would expand the Bank’s funders and borrowers thus providing a wider resource base.

BRICS New Reserve Arrangement

The BRICS (Brazil, Russia, India, China, and South Africa) are in talks about the introduction of a new currency and a payment system based on the blockchain technology. These plans would lessen the reliance upon US dollars and leave room for the BRICS to be active participants in global decision making processes. However, several people warn that the onslaught may be scuttled by Donald Trump’s threats to knock the doors of severe tariffs on rest of the countries that stray from the dollar.

BRICS has already set up two financing arrangements, a monetary fund dubbed the Contingent Reserve Arrangement and a development bank called the New Development Bank. These funds are meant to assist the members of the BRICS in times of global economic pressure. However, critics argue, they have not done enough to remove the hegemony of the dollar.

A challenge with the BRICS is that the countries that it groups are not at the same level in terms of dominance. The CRA and NDB are both based on equity © and Matsushita Consensus rules, which causes them to be dominated unequally. To address such issues, BRICS may have to reform its power distribution arrangements.

A further weakness of BRICS is its absence of a vehicle currency. A vehicle currency is a currency that is held in reserve and is able to facilitate trade between the countries that will be using it. At the moment, the BRICS do not have a vehicle currency thus; their trade and payments are based on the US dollar. This would become a huge hurdle if the dollar strengthens in value.

New Payment System of BRICS

Nations of BRICS are developing new ways through which they would be able to ease their dependency on the US dollar. Such a project, which is under the title BRICS Pay, is likely to have far reaching consequences in international trade and even in the overall economic collaboration on a global scale. The initiative is also designed to minimize the impact of the excessive Western domination in the world economic sphere.

According to BRICS representatives, the new system is envisioned to have a blockchain infrastructure which will ensure secure and speedy transactions. It would also cut back the expenditures incurred in seeking international trade. This is going to enable the member states to be independent of the conventional dominance that is now exercised by systems like SWIFT which is used for sending messages to other banks.

Better watch out: BRICS, an acronym for Brazil, Russia, India, China and South Africa, has a dollar-collateralised payment system in the works. According to experts, the BRICS Payment System is set to be a game changer, allowing developing nations to have more control. It has also been stated that the payment system will have a global impact and a whole lot of advantages for everyone involved.

In other news, this news, on the other hand, means nothing to the West and bolsters Russia, China and India the more BRICS expands. for the rest of the world however it would be interesting to see how the development pans out along with the other western alliances. That said, BRICS would face difficulties expanding itself owing to economic reasons and political motives since its members are divided as is. All things considered, another difficulty for the members is that the BRICS New Currency is still in the works.