BRICS, the economic union between five emerging economies, to name Brazil, Russia, India, China, and South Africa, has discussed the idea of creating their own cryptocurrency, to facilitate payments between the countries.
Russian Direct Investment Fund (RDIF) CEO Kirill Dmitriev brought up the suggestion on Thursday, November 14, during a BRICS forum, Russia media outlets reported. According to Dmitriev, all member nations have given a conditional approval of the idea.
As a result, a single cryptocurrency can eb created to facilitate payments between the countries. Here is what Dmitriev said:
“An efficiently operating BRICS payment system is able to stimulate settlements in national currencies and ensure the stability of settlements and investments between our countries, which form more than 20% of the global influx of foreign direct investment.”
The move is not completely surprising. Venezuela, an embattled and impoverished country ruled by an autocrat, has chosen to create the El Petro, a last-second attempt to save the defunct economy and raise overseas funds.
Yet, the move has had the opposite effect and Venezuela’s people have started exploring the possibility of cryptocurrencies in general – but certainly not the El Petro. However, electricity and Internet have proven difficult to come by, making the use of such currencies almost impossible.
Goodbye to the Golden Dollar
China also announced plans to create a government-issued cryptocurrency and replace FIAT currency as well as dependency on US dollar-backed financial system.
The latest announcement in the BRICS corner is a continuation on the efforts of these countries to pry themselves farther away from the economic heft of the United States.
Meanwhile, Nikita Kulikov, a MP and expert said that creating a cryptocurrency wouldn’t be an issue. The bigger challenge, he cautioned was how states would implement it and what mechanisms would underpin the token’s stability.
India, Russia and China are also trying to leave SWIFT (Society for Worldwide Interbank Financial Telecommunication) banking system, which is championed by the United States.
BRICS Are Not Alone
BRICS may not be the only outliers seeking to diversify the world’s financial system. German banks are also eager to issue digital currencies. Last October, the Association of German Banks presented a paper that championed the creation of a digital euro.
According to the Association, by establishing a clear-cut standard for such a digital currency, European financial institutions would have a mechanism to counteract money-laundering practices.
At the end of October, the European Union even proposed a new body to address the growing concern of AML. Cryptocurrency may just prove the palliative the EU needs.