BRICS Nations Discuss The Possibility of Using Digital Currency And Reduce USD Reliance for Trade

Digital currencies have drawn the attention of banks and regulators alike as its helps towards faster payments and settlements across the globe. It’s no wonder that digital currencies have a potential application in trade settlements and the BRICS nations are considering one such possibility.

During the recently held meeting, the BRICS Business council proposed developing a new payment system among its member nations. Russian News source RBC reported that BRICS nations are considering a digital currency for faster trade settlements among the member nations thereby reducing the reliance on USD.

Dmitriev said “BRICS has already reduced its use of USD in settlements over the last five years from 92 to 50 percent, while ruble-based transactions climbed from 3 to 14 percent”.

Kirill Dmitriev, director general of the Russian Direct Investment Fund (RDIF) appraised the reporters of this plan. Nikita Kulikov, member of the State Duma’s expert council said that the BRICS digital currency will only account for trade transactions. Note that this is just an ongoing discussion and no concrete decision has been taken yet.

“Most likely, it will be like certain obligations that can be transferred from one legal entity to another to confirm that the recipient will have claim rights, and the contractor will have obligations for a specific amount. It will not be money, we can say that it will be a paperless document flow to facilitate transactions,” said Kulikov.

The requirement of blockchain-based trade settlement platforms is growing rapidly. Such platforms not only help to speed-up the settlement process, they introduce more transparency and lesser manual interference.

Furthermore, the smart contracts based automated settlements help to overcome the trade obligations as certain conditions are met.

The U.S. is also closely monitoring the developments across the globe and the developments by its trade partners. Amidst the ongoing U.S.-China trade war, china has already accelerated its CBDC development. The People’s Bank of China is actively working with government authorities over its digital currency project.

Last month, an official from the U.S. Federal Reserve confirmed that the central is seriously considering the possibility of having a digital dollar. The official said that with growing competition in the digital currency market, the U.S. is at a risk of losing its dominant position for the US Dollar.