Is BRICS Finally Turning Talk Into Power?

Nations of the brics intergovernmental organization are working to link their fast payment systems and central bank digital currencies (cbdcs), the Digital Banker reported August 19. The move could be a notable step in transforming the group into a meaningful challenger to the United States-dominated financial system.

brics is named after its founding members, Brazil, Russia, India, China and South Africa. In recent years, it has expanded to include Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.

Since its founding in 2009, brics leaders have talked a big game, regularly gathering to denounce Western dominance and rail against what they portray as the “injustice” of American global hegemony. They have vowed repeatedly to build an alternative to the existing world order. But they have struggled to build unity and have failed to produce any defense pact, or even a workable economic mechanism.

But the economic side of that equation may finally be changing.

By linking their fast payment systems and cbdcs, the brics nations aim to build an integrated financial network that streamlines the flow of money across their borders.

Digital Banker explained how the linked mechanisms would operate:

This approach would not require brics to build one completely new payment system. Instead, it could create a common connection between existing systems. … [It would] create a standard way for instant payment systems in different countries to connect, rather than requiring every country to build a separate connection with every other country.

A customer could use a domestic payment application in one brics country while the receiving party uses its own national payment system.

There is also the possibility that two or more cbdcs could be linked and combined with tokenized central bank funds. This would enable the countries to conduct cross-border transactions directly in their own currencies without having to convert them into a shared currency first.

These measures would dramatically lower costs for participating nations, simplifying or eliminating the need for some aspects of payment messaging, foreign exchange, correspondent banking and final settlement.

Connecting these instant-payment networks would also speed up transactions, working in seconds. This would basically bring the speed of domestic transfers to international transactions, with benefits for consumers, travelers, remittance senders and small businesses.

The number one benefit, in the eyes of brics leaders, would be bypassing the U.S. dollar. Brazilian companies could pay in reais while Chinese sellers receive renminbi; Indian firms could pay in rupees while Indonesian sellers receive rupiah; and Russian companies could pay Iranian suppliers in rubles while the Iranian sellers receive rials. In all such cases, the dollar would be left out of the transaction.

The dollar would not suddenly disappear from global commerce, but every transaction conducted without it would gradually reduce its dominance. As Carnegie analysts Rajesh Bansal and Somya Singh have noted, alternative digital payment infrastructure could “gradually chip away at the hegemony of the dollar.”

Turning the plan into reality will be no small feat. Connecting these systems will require brics countries to overcome major differences in banking regulations, currency controls, data rules and anti-money-laundering requirements, while also addressing concerns about cybersecurity, technical standards, foreign exchange arrangements, privacy and sanctions.

The obstacles are formidable, but brics leaders appear determined to push ahead.

The Trumpet reports on such developments because biblical prophecy says a globe-girdling economic alliance will soon emerge and block America and its allies out of global trade. brics’s intensifying ambition to challenge the U.S.-dominated financial system is one of many developments today showing the eagerness of many countries to work against U.S. power, and it could help lay the groundwork for this prophesied alliance.

To understand, read our Trends article “Why the Trumpet Watches the Development of a Massive Anti-American Trade Bloc.”