BRICS Nations Eye Stablecoin Trade Solution
In Brief
BRICS announced the bloc’s consideration of using stablecoins as a common settlement medium for member countries.
BRICS has made headlines after the recent TV interview with Sergey Ryabkov, Russian Deputy Foreign Minister. In the interview, he stated that the bloc considers utilizing stablecoins as a common settlement medium for member countries.
With the news on the “BRICS Bridge” and plans to facilitate Central Bank Digital Currency (CBDC) transactions, this seems another big step to move away from the US Dollar.
Here are some key facts:
- BRICS is working harder to move away from the dollar as they prepare to start their stablecoin.
- Given the large gold reserves of the BRICS countries, there are rumors that the stablecoin will be backed by gold
- Some in the crypto community imply that BRICS will use XRP’s future stablecoin.
Stablecoins: The Key to a Multipolar World
As BRICS plans to start a stablecoin, it is stepping up its efforts to move away from the dollar. With the help of the BRICS stablecoin, the battle to stop using the US dollar for international trade may be almost over. This is just one of many steps to support the prospect of a “multipolar world.” The goal here is to wean global commerce off of the US currency.
While emphasizing the consensus among new and original members, Ryabkov stated that all members seriously explore the prospect of using stablecoins for international trade and that they all show “great enthusiasm,” working in harmony towards the common agenda led by Russia.
During the conversation, Ryabkov stressed that the newest additions were welcomed on the same footing as the founding members and that decisions were made by majority vote. This open-minded approach has made it possible for different cultures, customs, and economic objectives to coexist smoothly, broadening the bloc’s scope.
Back in March, Yury Ushakov, a Kremlin adviser, also spoke with the Russian news agency TASS, where he discussed efforts to develop a decentralized payment system using blockchain technology and cryptocurrency. He stated that this move was to prevent the negative impact of global financial and liquidity crises.
He also pointed out that establishing an “independent” BRICS payment platform is a central objective for the entire bloc, a platform that would be based on cutting-edge technologies in the blockchain sphere.
Moscow & Beijing Planning to End Dollar Hegemony
Since US sanctions have been growing tougher, Moscow has been pushing for a blockchain-based answer for some time now. Moscow is experimenting with a native digital currency, the digital ruble. As of April 2024, the cryptocurrency has been successfully used in more than 25,000 transfers.
To be a credible rival to the US dollar, rival countries like China need the international financial hubs, robust capital markets, and worldwide adoption that the USD dollar has. Even now, most payments made in US dollars go through the US. This is how the country was able to use payment systems as tools for sanctions.
Some countries, like Russia, disagree that the US dollar should be as important as it is and seek alternative currencies. After freezing assets worth around $300 billion, Russia has been looking for novel payment methods to use with its trading partners.
Backed By Gold?
Although information about the potential BRICS stablecoin is still scarce, some suspect it will be a gold-backed currency due to the member nations’ large gold resources.
In addition to offering inherent value and stability, a gold-backed stablecoin would support the bloc’s efforts to progressively distance itself from fiat currencies like the USD.
In addition, the BRICS Bridge is also proposed as a platform where member countries may use their own central bank digital currencies to make payments. The platform would be the “bridge” between the countries, letting them make payments using their own cryptocurrencies.
Stablecoin Market Surpassing $160B
It is important to note that the BRICS Group’s decision comes at a time when stablecoins are gaining dominance in the crypto sector. The market for stablecoins recently exploded past $160 billion, which is a sign of a big event that hasn’t happened since 2022.
Just recently, a Singaporean payments company called Triple-A announced that it will start supporting PayPal’s stablecoin as a viable medium of exchange for its members.
Ripple, a leading player in the blockchain sector, has also announced its plans to release its own stablecoin, yet another sign of the growing interest in stablecoins as valuable assets.
The Crypto Community Reaction
While the idea of creating such a stablecoin would have significant political and economic ramifications, there are still too many moving parts to make this vision a reality.
But, no matter how unlikely it is, the mere mention of such a move has ignited discussions on potential partnerships between the BRICS effort and existing blockchain projects.
Others have praised the move as an important first step toward creating a free market, with the idea that it could help economies worldwide by making them less dependent on the USD for global trading.
Some people in the crypto world have speculated that BRICS might leverage Ripple’s new stablecoin. Since the firm has just recently declared its intention to launch a stablecoin on the XRP Ledger, some imply that the two incidents may be more than merely a coincidence.
However, since none of the parties have made public announcements yet, it is still premature to call any of them partners. Overall, given the political consequences of this move for Ripple, the whole idea will probably remain as speculation.
The Outlook
By creating a powerful blockchain-based currency, BRICS can pose a threat to the dominance of the US currency. The idea is to have a different payment method for some key international players, even if it’s not likely that other states around the world would adopt the Russian ruble or any other BRICS currency over USD.
Of course, a big piece of the puzzle is the US government and its reaction to such maneuvers, as they can definitely de-escalate the situation or push the member states more towards a non-USD future.
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About The Author
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
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Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
