How BRICS is challenging SWIFT, Pg10

Key Highlights:

• BRICS nations are actively pursuing strategies to reduce reliance on the dollar-dominated international financial system.
• The Fortaleza Summit (2014) initiated the establishment of financial institutions like the New Development Bank and Contingent Reserve Arrangement.
• The BRICS Cross-Border Payments Initiative (BRICS Pay) aims to offer an alternative to the SWIFT network.
• A BRICS banknote was symbolically unveiled at the Kazan Summit (2024), signaling a move away from dollar dominance.
• A prototype of BRICS Pay was demonstrated in Moscow in October 2024.

Evolution of BRICS summit.jpg

Detailed Insights:

• Western sanctions on Russia after the Crimea deployment spurred BRICS to explore using national currencies for internal transactions.
• Currency cooperation through swaps, local currency settlements, and direct investments were agreed upon in 2017.
• The BRICS Payments Task Force was formed to develop systems facilitating transactions between member countries.
• BRICS Pay is motivated by a desire for financial sovereignty and reduced exposure to U.S. sanctions.
• Russia's SPFS, China's CIPS, India's UPI, and Brazil's Pix are potential building blocks for the BRICS Pay network.
• Interoperability between these systems is crucial for a cohesive BRICS-led payment infrastructure.
• UPI is accepted in nine countries, while CIPS has participants in over 120 countries, including most BRICS members.

Key Concepts Involved:

• SWIFT: A messaging network used by financial institutions globally for secure financial transactions.
• BRICS Pay: An initiative to create an alternative payment system among BRICS nations.
• Financial Sovereignty: The ability of a nation to control its financial system and policies without external interference.