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The five BRICS nations; Brazil, Russia, India, China and South Africa are considering the development of a common payment system or cryptocurrency to decrease their dependence on the U.S. dollar.
The creation of a cryptocurrency for the BRICS nations was discussed by the business council of the alliance during the forum in Brazil, said Kirill Dmitriev, the head of the Russian Direct Investment Fund (RDIF).
BRICS nations have developed sectorial cooperations in different areas, such as science and technology, trade promotion, energy, health, and education.
According to the Reuters, Kirill Dmitriev, pointed to increasing non-market risks of the global payment infrastructure for being the reason behind the plan to integrate the group’s national payment systems.
Dmitriev, a member of the BRICS Business Council, also told reporters that an efficient BRICS payment system can encourage payments in national currencies and ensure sustainable payments and investments among the BRICS nations, which make up over 20% of the global inflow of foreign direct investment.
Dmitriev further stated that the five BRICS nations had also discussed creating a common cryptocurrency for mutual payments. This comes as the BRICS nations were reducing the share of payments in the U.S. dollar.
Earlier this year, the South African Reserve Bank (SARB) released a consultation paper focusing on digital assets in the country as part of an Intergovernmental FinTech Working Group (IFWG), which includes the National Treasury, the South African Revenue Service (SARS), the Financial Sector Conduct Authority (FSCA) and the Financial Intelligence Centre (FIC).
The consultation paper was released in a bid to propose tougher regulation of cryptocurrencies and the use thereof in South Africa.
Further more, in a tender notice published on 14 May 2019, the South African Reserve Bank called for prospective solution providers in anticipation of a feasibility project on a digital currency.
It said “The primary aim of the project is for the South African Reserve Bank to investigate the feasibility and desirability of central bank issued digital currency to be used as electronic legal tender, complimentary to cash”
China also appears to have accelerated the push towards digital currencies after U.S. social media giant Facebook announced plans in June to launch a digital currency named Libra – the most high-profile proposed digital currency thus far.
Should the BRICS nations create their own common payment system, or cryptocurrency they will be able to find new avenues to trade among the alliance while decreasing their dependence on the U.S. Dollar.