by Pepe Escobar, The Unz Review:
With less than a month before the crucial BRICS annual summit in Kazan under the Russian presidency, serious informed discussions are raging in Moscow and other Eurasian capitals on what should be at the table in the de-dollarization and alternative payment system front.
Earlier this month Andrey Mikhailishin, head of the task force on financial services of the BRICS Business Council, detailed the list of top projects under consideration. They include:
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- A common unit of account – as in The Unit, whose contours were first revealed exclusively by Sputnik.
- A platform for multilateral settlements and payments in BRICS digital currencies, connecting the financial markets of BRICS members: that’s BRICS Bridge, which bears similarities with the Bank of International Settlements-linked MBridge, already in effect. That will complement intrabank systems already in action, as in Russia’s SPFS and Iran’s CPAM settling financial transactions – and 60% of their trade – in their own currencies.
- A blockchain-based payment system that entirely bypasses the US dollar: BRICS Pay. Arguably 159 participants may be ready to adopt this sanction-evading, similar-to-SWIFT mechanism right away.
- A settlement depository (Clear).
- An insurance system.
- And crucially a BRICS rating agency, independent from the Western giants.
What’s at stake is the extremely complex design of a brand-new financial system – decentralized and using digital technology. BRICS Clear, for instance, will be using blockchain to record securities and exchange them.
As for The Unit, the value of the common unit of account is pegged by 40% to gold and by 60% to a basket of BRICS member’s national currencies. The BRICS Business Council considers The Unit a “convenient and universal” instrument, since a unit can be converted into any national currency.
That would definitely solve the nagging problem of exchange rate volatility when cash balances accumulate from settlements in national currencies; for example, a mountain of Indian rupees used to pay for Russian energy.
Who Do I Call to Talk to BRICS?
I asked a very direct question to two Russian analysts, one of them a finance tech executive with vast experience across Europe, and the other the head of an investment fund with global reach. Considering the sensitivity of their posts, they prefer to remain anonymous.
The question: Is BRICS ready to become an actor in Kazan next month, and what should be on the table in terms of the strategy to establish an alternative payment system?
The Answers. Analyst 1:
“Time has come for BRICS to become a real actor. The world demands it. The leaders of BRICS countries clearly understand it. They have the moral power and the political will to set up an organization to provide a number for BRICS to be called in – that’s the best question for the upcoming summit.”
The analyst is referring to what could be dubbed “the Kissinger moment”, when Dr. K famously quipped, in the Cold War era, “when I want to talk to Europe, who do I call?”
Now to Analyst 2:
“For a BRICS agreement amongst countries to mean something, countries need to agree on a framework of action and that means accepting some responsibilities in exchange for certain rights. And it sounds there’s no better way to achieve that than to arrive at mutually agreed obligations on settlement of financial transactions.”
One of the analysts added a very important, specific point: “By now the situation is pretty clear, to properly address the issue of cross-border payments. The best mechanism should be based on the New Development Bank (NDB), given that Russia has a mandate to propose the new president of that organization. Whoever the candidate will be, cross-border payments should be at the top of his agenda.”
