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The Future of Global Payments: BRICS Pay and the Evolving Financial Order
Abstract
This paper examines the transformative potential of BRICS Pay, a blockchain-based payment system proposed by the BRICS nations, to challenge the dominance of Western-led financial institutions and the US dollar. It explores the system's strategic objectives of fostering financial independence and mitigating foreign exchange risks, its technical design, and the challenges it faces in scalability, interoperability, regulatory compliance, and cybersecurity. The analysis highlights the platform's potential to enhance intra-BRICS trade, reduce reliance on the US dollar, and contribute to a more multipolar global financial order. Furthermore, it identifies critical areas for future research, including economic and geopolitical impacts, technical architecture, regulatory frameworks, and the interplay with emerging financial technologies like central bank digital currencies (CBDCs) and decentralized finance (DeFi). This paper positions BRICS Pay as a significant innovation with implications for financial sovereignty, inclusivity, and global economic realignment.
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The BRICS nations—Brazil, Russia, India, China, and South Africa—are actively working on a new financial architecture that could reshape global trade by reducing dependency on Western financial systems and the U.S. dollar. Spearheaded by Russia, the proposed BRICS payment system aims to bypass Western-controlled mechanisms like SWIFT, using blockchain and distributed ledger technology (DLT) to enable direct trade in local currencies. This system is not just a response to sanctions but a strategic move to enhance financial independence and strengthen intra-BRICS trade.
The development of this alternative payment network marks a significant step in the global trend toward a multipolar financial system. It is expected to weaken the dominance of the U.S. dollar, reduce the effectiveness of U.S.-imposed sanctions, and offer countries in the BRICS bloc greater control over their economic transactions.
By moving key trade operations, such as agricultural commodities, away from U.S.-dominated markets, BRICS aims to optimize prices for its members, further undermining the competitive position of U.S. and Western farmers. If successful, this initiative could accelerate the global shift toward financial decentralization, posing long-term challenges for the Western financial hegemony.
As BRICS nations strengthen economic ties and integrate through this new system, the effects will ripple across the global economy, signaling a profound transformation in international finance and trade.
Decentralized finance (DeFi) is the term used to describe financial applications and services built on blockchain, the technology behind cryptocurrencies. DeFi uses blockchain as a trust mechanism, enabling unknown parties to transact with each other, removing unnecessary intermediaries, and lowering transaction costs. In order to seize the potential of blockchain technology in this particular industry and how it can be translated into other niches, it is necessary to understand its mechanics, implications, and particularities. This paper aims to present the operating principles, technologies, and security implications related to blockchain-based decentralized finance.
Existing scholarship has not systematically examined BRICS (Brazil-Russia-India-China-South Africa) as a rising power de-dollarization coalition, despite the group developing multiple de-dollarization initiatives to reduce currency risk and bypass US sanctions. To fill this gap, this study develops a 'Pathways to De-dollarization' framework and applies it to analyze the institutional and market mechanisms that BRICS countries have created at the BRICS, sub-BRICS, and BRICS Plus levels. This framework identifies the leaders and followers of the BRICS de-dollarization coalition, assesses its robustness, and discerns how BRICS mobilizes other stakeholders. The authors employ process tracing, content analysis, semi-structured interviews, archival research, and statistical analysis of quantitative market data to analyze BRICS activities during 2009-2021. They find that BRICS' coalitional de-dollarization initiatives have established critical infrastructure for a prospective alternative nondollar global financial system. This title is also available as Open Access on Cambridge Core.
The U.S. dollar's dominance seems under threat. The near collapse of the U.S. financial system in 2008-2009, political paralysis that has blocked effective policymaking, and emerging competitors such as the Chinese renminbi have heightened speculation about the dollar's looming displacement as the main reserve currency. Yet, as The Dollar Trap powerfully argues, the financial crisis, a dysfunctional international monetary system, and U.S. policies have paradoxically strengthened the dollar's importance. Eswar Prasad examines how the dollar came to have a central role in the world economy and demonstrates that it will remain the cornerstone of global finance for the foreseeable future. Marshaling a range of arguments and data, and drawing on the latest research, Prasad shows why it will be difficult to dislodge the dollar-centric system. With vast amounts of foreign financial capital locked up in dollar assets, including U.S. government securities, other countries now have a strong incentive to prevent a dollar crash. Prasad takes the reader through key contemporary issues in international finance-including the growing economic influence of emerging markets, the currency wars, the complexities of the China-U.S. relationship, and the role of institutions like the International Monetary Fund-and offers new ideas for fixing the flawed monetary system. Readers are also given a rare look into some of the intrigue and backdoor scheming in the corridors of international finance. The Dollar Trap offers a panoramic analysis of the fragile state of global finance and makes a compelling case that, despite all its flaws, the dollar will remain the ultimate safe-haven currency.
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