Discussions are taking place with members of the BRICS Finance Committee about an internal cryptocurrency which can be used as a payment and settlement mechanism within the five-nation bloc.
During the 3-day BRICS 2017 Summit in Xiamen, China, the head of the Russian Direct Investment Fund (RDIF), Kirill Dmitriev told reporters that the BRICS countries could create payment tools as an alternative to hard and national currencies.
Dmitriev revealed, “While national currencies is in focus, there are also discussions about cryptocurrencies being one of the possible settlement mechanisms.”
He further added that a cryptocurrency within BRICS, which is made up of Brazil, Russia, India, China and South Africa, would be able to replace currencies such as the US dollar in trade settlements between the member countries.
One of main issues regarding cryptocurrency development has been the lack of support from a central bank. However, if BRICS were to devise their own digital currency of which it had full control over, this would not be an issue. Naturally, unlike Bitcoin which many people use because of the anonymity it offers, a government-backed virtual trading currency would not require the same functionality.
It is not known what the exchange rate would be for a BRICS coin or token but it would appear possible to create a hybrid model based on the Special Drawing Right foreign-exchange system.
The BRICS countries have for some time considered breaking away from the US dollar, with the Chinese yaun currently being spoken of as the ‘local’ currency to use for internal settlements.
Whichever path the BRICS nations choose to follow, it seems as though they are determined to move away from hard foreign currencies. Whether BRICS uses a local trading currency or its own cryptocurrency, the result will be detrimental to one currency in particular – and that is the US dollar.