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BRICS Finance Ministers Discuss Making Settlements in National Currencies

The issue of conducting payment settlements in national currencies was discussed by the BRICS finance ministers and central bank governors during the meeting in São Paulo, Brazil, on Feb. 27, reports Sputnik.

“Most countries have said that settlement in national currencies is what the BRICS countries need,” Russian Deputy Finance Minister Ivan Chebeskov told Sputnik. “We are already a big BRICS family of 10 countries. Most countries supported the fact that it is necessary to build new mechanisms of settlements and shared the experience of developing digital currencies by central banks, the experience of building platforms, and participation in trials of various platforms.” Russia is chairing the BRICS during 2024, while Brazil is chairing the G20.

“That is, generally, we received a pretty good response that within BRICS, in order to increase trade turnover and to strengthen economic ties, we of course need independent settlement mechanisms in national currencies. It seemed to me that the majority of participants supported these ideas,” Deputy Minister Chebeskov added.

Chebeskov said he had brought up the Russian idea of a unified digital platform, which he referred to as a technological gateway for the unification of both digital currencies from central banks and national systems of financial messaging. He explained that software can be created to facilitate these transfers. “We propose to simplify in this way interactions between banks and create independent channels for payments and the transmission of financial messages,” he clarified.

He remarked that it is still difficult to assess to what degree BRICS countries are technologically and institutionally ready to join such a platform. In any case, he said the discussion was still on a “conceptual level.”

On all these currency and payment issues, the elephant in the room is the International Monetary Fund. Some of the BRICS countries are deeply involved in the dollar-based IMF system. For example, new BRICS member Egypt is currently under an IMF loan program that includes conditionalities. Ethiopia, also a new member this year, is in discussions with the IMF for such a program. It must be kept in mind that the IMF system is incompatible with, and cannot live in the same universe as, the emerging BRICS system, which is oriented to the real economy of its member states.