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As the BRICS 2024 summit convenes in Kazan, discussions on
cryptocurrency have gained prominence among member nations, aligning with
broader strategies to reduce reliance on the US dollar.
Russia is developing a settlement and payment infrastructure
to bypass Western payment systems, a key element of the de-dollarization
efforts expected from the summit.
CBDCs Potentially Reduce Dollar Dominance
Although there has been some progress in de-dollarization,
BRICS countries still show a higher level of dollarization than the global
average of about 47% for cross-border lending and international debt
securities, highlighting the challenges ahead.
In response, Russia is advancing
its m-Bridge initiative, which uses central bank digital currencies (CBDCs) for
cross-border payments, potentially reducing the US dollar’s dominance in
global finance.
ING analysts note that “over the last four years, the
share of BRICS foreign exchange in cross-border bank claims has increased to
15%, while other emerging market currencies have risen to 19%.”
Putin Critiques Dollar Weaponization
If successful, m-Bridge could further diminish the dollar’s
role in international finance. However, the initiative faces organizational and
governance challenges, despite interest from over thirty central banks.
During the summit, Russian lawmakers encouraged miners to
sell their Bitcoin to international buyers, allowing countries to utilize
Bitcoin and other crypto assets for imports. This information was shared by
Matthew Siegel, Head of Digital Assets at VanEck, in a Bloomberg terminal
report.
As the BRICS Summit Kicks Off, Top Lawmakes Are Pushing the Idea that Russian Miners Could Sell Their #Bitcoin to International Buyers, Who Would Use BTC and Other Crypto to Pay for Imports, Effectively Bypassing Western Sanctions.🧵 pic.twitter.com/AyI8Km64Y1
— matthew sigel, recovering CFA (@matthew_sigel) October 23, 2024
Russian President Vladimir Putin addressed the issue of the
dollar’s use as a political weapon, stating: “The dollar was used as a
weapon. It is true. If they don’t let us work with it, what else should we do?
We should seek other alternatives.”
BRICS Enhances Crypto Infrastructure
Russia is working to establish a settlement and payment
infrastructure that would bypass the Swift payment system, a key proposal
emerging from the summit.
The partnership between BitRiver and the RDIF aims to create
crypto and AI data centers across BRICS nations, enhancing computing power and
reducing reliance on Western technology.
This initiative aligns with Russia’s
recent crypto mining regulations introduced in August 2024, which offer
operational guidelines for miners and data center operators.
The collaboration reflects the coalition’s growing influence
in the crypto sector as BRICS nations struggle for a self-sufficient and
technologically advanced ecosystem.
This article was written by Tareq Sikder at www.financemagnates.com.
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