At the Kazan Summit, Russia made a concerted push for the creation of a new payment system, aiming to provide an alternative to the global bank messaging network SWIFT. This proposal is part of Moscow’s strategy to circumvent Western sanctions imposed in response to its war in Ukraine.
Russian President Vladimir Putin envisions BRICS—recently expanded to include Egypt, Ethiopia, Iran, and the United Arab Emirates alongside Brazil, Russia, India, China, and South Africa—as a powerful counterweight to Western influence in global politics and trade. A cornerstone of this vision is an alternative international payment platform, designed to shield participating nations from Western sanctions and reduce reliance on the US dollar.
The Kazan Summit, held from October 22 to 24, 2024, was presented by Moscow as evidence that Western attempts to isolate Russia have failed. Central to Russia’s agenda was its call for overhauling the global financial system to diminish the dominance of the dollar.
Central to this initiative is a proposal for a new payment system based on a network of commercial banks linked through the BRICS central banks, as outlined in a document prepared by Russia’s finance ministry and central bank, and distributed to journalists ahead of the Summit.
The proposed system would leverage blockchain technology to store and transfer digital tokens backed by national currencies. This framework would enable these currencies to be exchanged securely and efficiently, bypassing the need for transactions in U.S. dollars.
Russia views this proposal as a solution to its growing challenges in settling trade payments, even with friendly nations like China, where local banks are wary of potential secondary sanctions imposed by the United States.
One specific mechanism under discussion is the BRICS Cross-Border Payment System, designed to facilitate trade in local currencies. This shift is partially driven by perceptions of increasing risks associated with the U.S. dollar. However, the focus on local currencies is not solely about de-dollarisation but also about achieving cheaper and more efficient transactions.
For Russia, cut off from the Society for Worldwide Interbank Financial Telecommunications (SWIFT), this represents a financial lifeline. For Egypt, it offers a way to alleviate pressure on foreign reserves. Meanwhile, South Africa, Brazil, and India are adopting a more cautious approach, favouring diversification without fully divesting from the dollar.
Russian President Vladimir Putin, who presided over the closing session of the BRICS Summit, lauded the Bloc’s role in countering Western policies. He emphasised the need for a new payment system to bypass sanctions, aiming to counterbalance what he referred to as the West’s “perverse methods.”
Putin accused the West of attempting to suppress the rising power of the Global South through illegal unilateral sanctions, blatant protectionism, manipulation of currency and stock markets, and persistent foreign influence, all under the guise of promoting democracy, human rights, and the climate change agenda.
“Such perverse methods and approaches – to put it bluntly – lead to the emergence of new conflicts and the exacerbation of existing disputes,” Putin stated.
However, Yaroslav Lissovolik, founder of the BRICS+ Analytics think tank, noted that while the creation of such a system is technically feasible, it would take time. “After the significant expansion of BRICS membership last year, achieving consensus has arguably become more challenging,” he remarked.
The Russian document accuses existing institutions, such as the International Monetary Fund (IMF), of primarily serving the interests of Western countries and argues that these institutions need reforms to reflect the evolving global economy better. Russian Finance Minister Anton Siluanov recently urged BRICS members to establish an alternative to the IMF.
In addition to proposals aimed at facilitating trade and investment, Russia has put forward the idea of creating a ‘BRICS Clear’ platform to facilitate trade in securities. The document also calls for improved communication between credit rating agencies in BRICS countries, alongside the development of a common rating methodology. However, it stopped short of advocating the establishment of a joint BRICS rating agency, an idea that the Group had previously discussed.
A BRICS Grain Exchange
As the world’s top wheat exporter, Russia is also advocating for the creation of a BRICS grain trading exchange, supported by a pricing agency, to serve as an alternative to Western exchanges that currently set international agricultural commodity prices. Russia’s multifaceted initiatives underscore its determination to challenge Western dominance in global finance and trade. Whether these proposals gain traction depends on the ability of BRICS nations to navigate technical, political, and logistical hurdles. While the path to implementation may be fraught with challenges, the discussions signal a shift in the global economic order and the waning supremacy of the US dollar.
