Russia Calls on BRICS Countries to ‘Ring Fence’ New Cross-Border Payments Network

Russia reportedly aims to create a new system for cross-border payments between BRICS countries.

A report that includes this plan was published ahead of an annual BRICS summit that will be held Oct. 22-24, Bloomberg reported Friday (Oct. 11).

BRICS includes as members Brazil, Russia, India, China and South Africa, as well as newer members added in January: Iran, the United Arab Emirates (UAE), Ethiopia and Egypt, according to the report.

The report prepared by the Russian Finance Ministry, the Bank of Russia and Moscow-based consultancy Yakov & Partners includes options like developing a network of commercial banks to conduct cross-border transactions in local currencies, establishing direct links between central banks, creating centers for mutual trade in commodities, and using distributed ledger technology (DLT) or a new multinational platform for settlements with tokens, the report said.

Russia is proposing these changes to circumvent the existing global financial system and make its economy more resistant to international sanctions, per the report.

The new system would “ring-fence its participants from any external pressures such as extraterritorial sanctions,” the report said.

Russia has been working to reduce its dependence on the U.S. dollar since the U.S and its allies froze the country’s foreign assets and kicked Russian lenders off the Swift financial messaging system after Russia’s February 2022 invasion of Ukraine, according to the report.

It was reported in December 2019 that BRICS was moving toward a unified payment system and that Russia was in the midst of developing its own payments system as a Swift alternative in the wake of sanctions that were imposed by Western nations as Russia annexed Crimea.

At that time, the BRICS countries were home to about 40% of the world’s population.

In April 2022, with sanctions cutting Russia off from the global system, it was reported that Russia called for the BRICS group to extend the use of national currencies and integrate payment systems.

A Russian official said at the time that the BRICS countries had the resources to help curb the consequences of the sanctions and their effect on the existing international monetary and financial system, for both their own economies and the global economy as a whole.