The BRICS consortium has indicated a keen interest in rolling out a stablecoin for international settlements amid an ambitious plan to whittle down the influence of the greenback.
According to Russian Deputy Foreign Minister Sergei Ryabkov, the economic coalition comprising Brazil, Russia, India, China, and South Africa is probing the viability of launching a stablecoin in the coming months.
Ryabkov’s statement follows several initiatives by BRICS to dabble in digital assets, but details of the pivot to stablecoins remain unclear. There is widespread speculation that the proposed stablecoin will be backed with gold rather than fiat reserves as the economic bloc attempts to create a new world order.
At the moment, BRICS members and the latest entrants have substantive gold holdings, crediting the theory.
Others argue that BRICS could turn to Ripple’s XRP settlement platform for the stablecoin with a cross-section suggesting that the coalition could build its platform from scratch.
For Ryabkov, the underlying mechanism will have little effect on the need to improve cross-border trade between member states. The Deputy Foreign Minister opines that a successful stablecoin launch will be a precursor for a unified currency for BRICS member states.
One school of thought argues that the stablecoin will depend on BRICS launching a joint central bank digital currency (CBDC). However, no concrete plans for a CBDC by BRICS have materialized, but previous high-level discussions between member states have confirmed an intent to explore blockchain technology.
“We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain,” said a Russian official.
Russia will head the BRICS coalition for a year and has previously tinkered with stablecoins, turning to the offering for cross-border trade. Russia is expected to leverage its experience with stablecoins in its attempt to establish a common digital currency for BRICS countries.
Circumnavigating sanctions
Outside of promoting seamless cross-border transactions, BRICS nations are also keen on reducing the abilities of Western powers to impose economic sanctions.
Russia and China have borne the brunt of economic sanctions in recent years, with experts noting that a shift to digital currencies will be a veritable way to circumnavigate the sanctions.
“This transformation is not straightforward,” said Russia’s Foreign Minister Anton Siluanov. “We see what restrictions and sanctions are trying to restrain China and Russia – these are the consequences of the paradigm shift.”
