BRICS May Build An Internal Payments Network

BRICS May Build An Internal Payments Network

over 4 years ago2 mins

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China denied this week that its groundbreaking state-sponsored “cryptocurrency” was ready for launch, following a spate of fake news online. But the BRICS group of nations is reportedly now looking at launching a digital currency of its own… 😯

What does this mean?

China, Brazil, Russia, India, and South Africa are the world’s largest “emerging economies”. And they get together regularly to shoot the economic breeze.

One common bugbear is the countries’ continued reliance on the inconveniently strong US dollar to settle international trade. So a proposal at their last meeting isn't entirely unexpected: the potential development of a shared digital currency for the BRICS nations to use when trading goods between themselves.

The dollar remains the world’s principal reserve currency (Source: IMF)
The dollar remains the world’s principal reserve currency (Source: IMF)

For now, the project remains an (oil)pipe dream. But the impending launch of China’s own “Digital Currency Electronic Payment” is decidedly real. The yuan-based stablecoin is aimed squarely at consumers: but not just yet. Despite scammy websites claiming otherwise, China’s not-quite-a-cryptocurrency isn’t due out until at least December 10th. And in the meantime, the country is cracking down again on any other crypto trade… 👺

Why should I care?

As if a Chinese digital currency, Facebook’s supranational Libra project, and newly unearthed plans for a European “e-euro” weren’t enough, the BRICS scheme poses yet another threat to the US dollar’s global supremacy.

Russia has apparently already cut its usage of the dollar in pricing trade by half in recent years (although that may also have something to do with international sanctions on the country). And with BRICS representing the fastest-growing quarter of the global economy, a further coordinated, blockchain-enabled shift away from the dollar could significantly undermine the US’s pre-eminent role in both the world’s economic and its political affairs 😲

For now, the dollar remains on top. But that may largely be due to the lack of a credible alternative. If the launch of an easily accessible digital yuan happened to coincide with a major investor aggressively selling US government bonds, this picture may rapidly shift…

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