China’s President Xi Jinping, India Prime Minister Narendra Modi, South Africa’s President Cyril Ramaphosa, Brazil’s then President Michel Temer and President Vladimir Putin, during the BRICS Summit ‘family photo’ held in Johannesburg, South Africa, 26 July 2018. Mike Htuchings/Pool

The association of the five major emerging economies, BRICS, has discussed the creation of a digital currency to reduce their reliance on the dollar in settlement, Russian financial news outlet RBC reported on 14 November.

According to the report, the proposal was made by the association’s Business Council during the 11th annual BRICS Summit in Brazil. During the meeting, the five member nations were discussing the development of a new payment system for settlements, which could ease trade in the bloc, when the possibility of using a digital currency was raised.

Though the decision to move forward with the plan has not been taken, the director general of the Russian Direct Investment Fund (RDIF), Kirill Dmitriev, told reporters:

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“An efficiently operating BRICS payment system is capable of stimulating settlements in national currencies and ensuring the stability of settlements and investments between our countries, which form more than 20% of the global influx of foreign direct investment.”

Dmitriev further stated that the development of such a payment system, and its sustainable integration, will be an “important factor” in the economic partnership between member countries “in the face of increasing non-market risks of the global payment infrastructure”.

He also said that BRICS has reduced its use of the U.S. dollar in settlements over the past five years, from 92% to 50%. The new payment system could reduce member nations reliance on the USD even further, as it would use its member nations’ national currencies.

Nikita Kulikov, member of the State Duma’s expert council, also said that creating a cryptocurrency is not difficult, and that understanding how countries will use it is more important.

He further stated that instead of being digital money, the digital currency will most likely be used to facilitate trade transactions. He said:

“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”

Created in 2006, the BRICS association is aimed at boosting the economic and political cooperation between its five member nations, namely Brazil, Russia, India, China and South Africa.

Its annual summits also focus on strengthening the unity between its members in different fields, and advance the countries’ cooperation in the fight against drug trafficking money laundering and organized crime.

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