The recently concluded BRICS meet at Kazan, Russia, is significant for a number of reasons. Russia’s President Vladimir Putin might have succeeded in sending out a message to the West that he is not ‘isolated’ despite the sanctions on Russia in the wake of the Ukraine war; apart from the original members of the grouping (China, India, Brazil and South Africa), Egypt, Ethiopia, Iran and UAE were in attendance.

BRICS is now too diverse to be dubbed a Russia-China club. But BRICS is really being watched for its intent to carve out a different ‘global financial architecture’. There are three strands to this goal. First, BRICS’ Big Boys, China and Russia, have been bent upon dismantling the pre-eminence of the dollar in global transactions and holdings. This is more in the nature of a grand geo-strategic ambition. However, India has voiced what could become a consensus within the grouping — advocating trade in local currencies and increasing financial integration within BRICS, without questioning the pre-eminence of the dollar.

This goal (the second strand) finds favour in a context where global trade and financial flows have been increasingly impaired by the ‘weaponisation’ of SWIFT, a payments messaging system linked to dollar invoiced trade that links 11,000 banks across the world. When the West expels adversaries such as Iran and Russia from SWIFT, it hurts third party countries such as India and Saudi Arabia as well.

As a result, more countries are keen to hedge their bets in a world racked by geo-political turmoil. Saudi Arabia, believed to be on the cusp of joining BRICS, has entered into a three year currency swap deal with China with effect from November 2023. The third aspect of BRICS’ vision has been an abiding one — namely, nurturing the New Development Bank and Contingency Reserve Arrangement as alternatives to the Bretton Woods combine, where developing countries have a voice.

In a more immediate sense, the emergence of digital currencies, blockchain technology and Unified Payments Interface, has become a game-changer. Deals can be settled in mutually agreed currencies, or a synthetic currency perhaps. In that case, a ‘BRICS currency’ becomes unimportant. BRICS countries have expressed the need for developing a platform (BRICS Bridge) where central bank digital currencies can be linked. This will reduce intermediation costs. According to a June 2024 ECB report, ‘The international role of the Euro’, , BRICS countries are working on crypto-asset and blockchain-based platforms to settle international trade deals. India’s seriousness with respect to CBDC should stand it in good stead, with China too having developed the digital yuan. In sum, developing a blockchain-based payments platform as well as an alternative to SWIFT messaging system is entirely feasible within a group of countries, provided it is not controlled by a single country. It is a question of sorting out clearing house logistics and other technicalities.