MINSK, 4 November (BelTA) - Yuliya Abukhovich, an economic expert and senior researcher at Giprosvyaz, assessed the prospects of creating a unified BRICS financial system in an interview with BelTA.
“The West's relations with the rest of the world in the financial field have recently turned into hostilities: it has confiscated interest income from the frozen assets of the Central Bank of Russia, threatens secondary sanctions against anyone who settles accounts with us, and has generally turned the financial system into a weapon. This is deeply troubling in the non-Western world, and a growing number of states are interested in alternative, non-U.S. dollar payment mechanisms. The Kazan declaration [following the BRICS summit] is carefully worded: it does not reject the Western world, it recognizes the important role of the existing international financial organizations, and it carefully mentions the need to reform the Bretton Woods system. Even representatives of Russia, one of the states most determined to dedollarize, specifically emphasized that nothing parallel to SWIFT will be developed,” Yuliya Abukhovich said.
Today, more than 60% of mutual settlements between the BRICS member states are made in national currencies. “Thus, there is a basis for the formation of an alternative financial and settlement reality - the development of a system of mutual settlements in currencies other than U.S. dollars. Not everyone, however, is ready for a revolutionary change of the usual international financial pattern. The possible introduction of a new “synthetic” BRICS currency is unlikely, as it does not correspond to the interests of China, whose currency now occupies the largest share in settlements in national currencies. At the same time, some countries are afraid of becoming dependent on China if the Chinese yuan becomes the main settlement and reserve currency after they abandon the U.S. dollar. India is generally against de-dollarization,” the expert said.
“On the whole, BRICS achievements in the field of finance and investment are still modest. The mechanism for ensuring mutual settlements of its participants will apparently be based on the opening of swap lines in national currencies by the two central banks with the focus on their exchange rates against the U.S. dollar. In a slightly more distant perspective (this may happen sooner than expected, as processes in the world have been moving very fast recently), BRICS will have a platform for cross-border payments using the central banks' digital currencies. At the summit in Kazan, the Russian president proposed the development of a BRICS Bridge system based on technology comparable to mBridge, being developed by the Bank for International Settlements together with the central banks of China, Hong Kong, UAE and Thailand since 2017. The readiness of this payment system for settlements in digital yuan was announced last year,” Yuliya Abukhovich added.
“The West's relations with the rest of the world in the financial field have recently turned into hostilities: it has confiscated interest income from the frozen assets of the Central Bank of Russia, threatens secondary sanctions against anyone who settles accounts with us, and has generally turned the financial system into a weapon. This is deeply troubling in the non-Western world, and a growing number of states are interested in alternative, non-U.S. dollar payment mechanisms. The Kazan declaration [following the BRICS summit] is carefully worded: it does not reject the Western world, it recognizes the important role of the existing international financial organizations, and it carefully mentions the need to reform the Bretton Woods system. Even representatives of Russia, one of the states most determined to dedollarize, specifically emphasized that nothing parallel to SWIFT will be developed,” Yuliya Abukhovich said.
Today, more than 60% of mutual settlements between the BRICS member states are made in national currencies. “Thus, there is a basis for the formation of an alternative financial and settlement reality - the development of a system of mutual settlements in currencies other than U.S. dollars. Not everyone, however, is ready for a revolutionary change of the usual international financial pattern. The possible introduction of a new “synthetic” BRICS currency is unlikely, as it does not correspond to the interests of China, whose currency now occupies the largest share in settlements in national currencies. At the same time, some countries are afraid of becoming dependent on China if the Chinese yuan becomes the main settlement and reserve currency after they abandon the U.S. dollar. India is generally against de-dollarization,” the expert said.
“On the whole, BRICS achievements in the field of finance and investment are still modest. The mechanism for ensuring mutual settlements of its participants will apparently be based on the opening of swap lines in national currencies by the two central banks with the focus on their exchange rates against the U.S. dollar. In a slightly more distant perspective (this may happen sooner than expected, as processes in the world have been moving very fast recently), BRICS will have a platform for cross-border payments using the central banks' digital currencies. At the summit in Kazan, the Russian president proposed the development of a BRICS Bridge system based on technology comparable to mBridge, being developed by the Bank for International Settlements together with the central banks of China, Hong Kong, UAE and Thailand since 2017. The readiness of this payment system for settlements in digital yuan was announced last year,” Yuliya Abukhovich added.
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