In a recent statement, Anatoly Aksakov, the Russian State Duma Committee on Financial Market’s chair, noted there’s a push within the BRICS bloc to transition from the U.S. dollar to cryptocurrency for trade purposes. Aksakov emphasized the alliance’s efforts to leverage digital assets instead of traditional fiat currency for international commerce.
The BRICS economic alliance, initially comprised of Russia, Brazil, India, South Africa and China, has long been committed to reducing reliance on the U.S. dollar, advocating for the use of local currencies. Consequently, the creation of digital currency transaction solutions has become a focal point, notably with the introduction of the BRICS Pay system aiming to steer away from dollar dependence.
Over the past year, the trade alliance has actively pursued a multipolar world agenda, evident in its expansion to include five new members at the 2023 annual summit. Emphasizing the importance of local currencies in bilateral trade further underlines this effort. The new member nations include Egypt, Iran, the United Arab Emirates (UAE) and Ethiopia.
The alliance is now prepared to take a significant stride by exploring crypto as an alternative to the U.S. dollar in international trade. Russia highlighted the bloc’s potential as a key conduit for lowering the use of fiat money in international trade. Of particular interest is the bloc’s commitment to creating its Central Bank Digital Currencies (CBDCs) to replace fiat currencies, a stark contrast to the U.S.’s reluctance to engage in such endeavors.
These initiatives present a compelling opportunity for the economic alliance to carry out its dedollarization efforts. Sergey Ryabkov, Russia’s deputy foreign minister, recently discussed plans to establish new financial platforms supporting digital assets over traditional fiat currencies, such as stablecoins.
Ryabkov proposed the creation of the BRICS Bridge, a platform that would integrate the financial systems of member nations and bolster the global monetary landscape by incorporating digital currencies. The initiative offers a clear pathway for the BRICS countries to reduce their dependence on the U.S. dollar. Additionally, Financial Stability Board (FSB) chair, Klaas Knot, noted the significance of tokenization, AI and cryptocurrency assets, indicating a growing interest in digital solutions in international finance.
While transitioning away from the U.S. dollar may raise concerns, especially in unilateral trade agreements with BRICS members, the bloc remains steadfast in its strategy to diversify its currency reserves and foster greater financial autonomy.
As the BRICS actualize their dream to use cryptos for international trade, there is likely to be a positive spillover effect on crypto companies such as Hive Blockchain Technologies Ltd. (NASDAQ: HIVE) (TSX.V: HIVE) since demand will surge and investments will likely pour into the industry.
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