By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business News – April 18, 2022

During a meeting of finance ministers and central bank governors of the BRICS countries chaired by China on April 8, the Russian Finance Minister Anton Siluanov said interesting words. The official claimed that Western sanctions are pushing BRICS (Russia, Brazil, India, China, South Africa) to create their own international payment system, financial messaging system and independent rating agency.

Russia has already developed its own system. Indeed, as a way of circumventing Western sanctions, Russia launched in 2014 the Financial Messaging System (SPFS) in test mode, which can transmit data in the SWIFT format, but does not depend on its channels. In 2017, SPFS started working in full regime, transmitting messages about transactions in any currency. Initially, it was intended only for domestic Russian users, but by April 2021, more than 20 Belarusian banks, the Armenian Arshidbank and the Kyrgyz Bank of Asia were connected to it. Subsidiaries of large Russian banks in Germany and Switzerland also have access to it. Negotiations are underway on SPFS settlements with China. To date, 399 users are taking part in the SPFS system, including banks from Belarus, Armenia, Kyrgyzstan, Kazakhstan, Tajikistan and Cuba. In 2020, the monthly traffic of SPFS amounted to 2 million messages, the share of the system in the domestic exchange of financial data was 20.6%, ahead of SWIFT. At the same time, more than half of domestic financial messages were transmitted using other channels, including Sberbank Finline.

In addition, Anton Siluanov stressed on April 8 on the use of national currencies for export-import transactions and the integration of payment systems and cards. According to the Russian Finance Minister, reforming the current international financial system “should be aimed at ensuring the independence and continuity of economic processes.”

The Chinese Finance Minister, Liu Kun, called on on BRICS countries to shoulder their responsibilities and strengthen macro policy coordination to boost the global economy, amid slow economic growth worldwide and complex geopolitical situation.

Anton Siluanov noted that the sharp rise in energy and food prices would have a negative impact on the state of the economies of developing countries. “The situation in the global economy has deteriorated significantly as a result of the sanctions. Bans on settlements, disruption of production and supply chains, export controls and import bans – all of these restrictions hit the global economy. Soaring prices for food, energy and commodities will hit mainly developing countries and low-income countries,”, said the Russian official.

However, the Russian proposal of creating a payment system within the BRICS, as an alternative of SWIFT, is not supported by Brazil, said the secretary of International Economic Affairs at the Brazilian Ministry of Economy, Erivaldo Alfredo Gomes. “This is not a work topic, it is not on Brazil’s agenda,” said the secretary in a press conference. The Brazilian official added that the suggestion was presented by Russia in a recent meeting of the BRICS, but so far there is no consensus among the countries of the group.

Representatives of the BRICS countries also discussed cooperation through the New Development Bank, investment in infrastructure, and the creation of a BRICS research network. The central banks of BRICS have agreed on a decision to conduct the fifth test of the BRICS Contingent Reserve Pool mechanism using alternative currencies.

The next annual meeting of BRICS leaders will take place in June in China. This event will see Indian Prime Minister Narendra Modi with Russian President Vladimir Putin, Chinese President Xi Jinping, President of Brazil Jair Bolsonaro and Cyril Ramaphosa, President of South Africa for the first time since the war began in Ukraine on February 24.

Read also : How will Russia respond to Western sanctions ?

Russia want to convince China and India within the BRICS to further develop an alternative financial and trade system. The disconnection of large Russian banks from SWIFT fuels the Russian move to free its economy from dollards and strengthen partnership with China. Both China and Russia have been steadily purchasing gold bars since 2014 and have been voicing for an alternative global monetary system, built on regional currencies and not anymore on the US dollar.

Lastly, the Executive order of U.S. President Joe Biden banning the transfer and the use of U.S. dollars to Russian or Russian nationals and legal entities have greatly damaged the status of dollar as international reference currency. Now countries like China, India, Russia, Brazil and African countries are thinking about building an alternative international currency system, if they had not already thought about it. Gold could come back as the currency standard in coming years. The days of the paper-dollars are counted.

Read more about gold, inflation and monetary imbalances with Gold : Build Your Wealth and Freedom

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© Copyright 2022 – Swann Collins, investor, writer and consultant in international affairs.