BRICS PAY SYSTEM

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Context

• The BRICS Bloc is launching BRICS Pay.

About BRICS Pay

• BRICS PAY is a Digital Payments Platform that is being jointly developed by the member countries of the BRICS (Brazil, Russia, India, China, and South Africa) economic bloc.
• BRICS Pay is a new financial settlement platform for the member countries to use.
• The system uses blockchain technology. However, it is not a CBDC or cryptocurrency. It is a Digital Service that does not have a single acceptable currency. In turn, this allows any of the BRICS member to use their own native currencies.

Aim

• BRICS PAY aims to enable digital payments between the different countries in the BRICS PLUS format, allowing businesses and consumers to securely and seamlessly make and receive payments in their local currency.

Objective

• The platform is designed to reduce the cost and complexity of international payments, while also providing a secure and reliable way to pay for goods and services.

Purpose

• BRICS Pay serves several main purposes. Mainly, it helps international trade cross-border payments between companies, investments, and microfinance.
• This is a major step towards making trade between the member countries easy and able to transact in real-time.

Implementation

• The UK’s Standard Chartered Bank has integrated BRICS Pay into its digital payment platform to enable its customers to make payments to other BRICS countries.
• In addition, the State Bank of India has launched a BRICS Pay-based mobile app for cross-border transactions.
• Russia’s Sberbank has partnered with the payment system so that its customers to make cross-border payments.

Significance

• The BRICS member countries are focusing on de-dollarization and using their respective national currencies.
• The new payment system will accelerate this process.
• In essence, BRICS Pay is poised to revolutionize international trade, investments, and microfinance, facilitating cross-border payments between companies.
• It will contribute to the seamless flow of capital and goods between the BRICS nations.
• This innovative platform stands as a testament to the BRICS Bloc’s commitment to fostering a more interconnected and financially inclusive world.

Dedollarisation Dedollarisation refers to countries reducing reliance on the U.S. dollar as a reserve currency, medium of exchange, or unit of account. The U.S. dollar began to displace the pound sterling as an international reserve currency from the 1920s. After the U.S. emerged as an even stronger superpower during the Second World War, the Bretton Woods Agreement of 1944 established the post-war international monetary system. In this, the U.S. dollar ascended to become the world's primary reserve currency for international trade. De-dollarization could be viewed as a backlash against the hegemony of the U.S. currency. The U.S. has used the dominance of the dollar as a tool to promote and enforce its economic interests around the world, causing other countries to look for ways to step around the currency.

Read about the Benefits of the BRICS Expansion plan and launching of BRICS currency: https://www.iasgyan.in/daily-current-affairs/brics-startup-forum