BRICS Advances Alternative Payment Systems to Reduce Western Dependence
BRICS countries are actively discussing the development of alternative payment platforms to reduce their reliance on American financial systems, according to a report from Tass on February 19. The report cited Russian Foreign Minister Sergey Lavrov, who mentioned during his address to the Russian State Duma that this initiative was originally proposed by Brazilian President Luiz Inácio Lula da Silva.
Lavrov stated, “This is being discussed in BRICS, at the initiative of Lula da Silva… The previous summit stated a decision on the necessity of developing a proposal on alternative payment platforms through finance ministries and central banks.” He further explained the proposals, which include the creation of a transborder payment initiative, a reinsurance company, and the BRICS Clear settlement and depositary infrastructure.
The main objective of these proposals is to provide member states with greater financial sovereignty through independent transaction mechanisms.
The 16th BRICS Summit, held in Kazan from October 22-24, 2024, under the chairmanship of Russia, was a significant milestone. It was the first summit to include newly admitted members. During the summit, BRICS leaders formalized their commitment to alternative payment solutions by adopting the Kazan Declaration. The declaration outlined key financial goals, including the establishment of an independent cross-border settlement and depositary infrastructure called BRICS Clear. The finance ministers and central bank chiefs of member states were assigned the task of further considering the use of national currencies, payment instruments, and platforms. This collective effort indicates a move towards establishing a financial system that is less dependent on Western institutions.
BRICS countries have been actively working to reduce their reliance on the U.S. dollar in global trade and financial transactions. Many member states have increasingly turned to local currencies in trade agreements as a means to bypass Western-dominated financial systems.
The push for alternative payment platforms, such as BRICS Clear and the trans-border payment initiative, is separate from discussions about a single BRICS currency. While the payment platforms focus on enabling cross-border transactions using existing national currencies, the single currency initiative, which is still in the early stages of discussion, would require deeper financial integration and a shared monetary framework. Independent payment platforms allow BRICS countries to strengthen economic cooperation while maintaining control over their domestic monetary policies, without the need for extensive policy coordination that a common currency would entail.
