The BRICS nations are advancing plans for an internal trade currency, possibly launching next year. The Russian Academy of Sciences recently unveiled a prototype trade currency called the Unit, backed by 60% of BRICS national currencies and 40% in physical gold.
Each national currency within the Unit is equally represented by the Brazilian real, Chinese yuan, Indian rupee, Russian ruble, and South African rand. Comprising five founding members, BRICS now includes 11 nations, accounting for more than a third of global GDP collectively.
The initiative aims to create an independent payments system outside U.S. dollar dominance. The Unit is integral to the BRICS Cross-Border Payments Initiative (BCBPI), providing an industry-focused alternative to Swift’s cross-border network and establishing parallel messaging infrastructure.
Next year, initial tests will involve Brazil, China, and Russia to refine transaction efficiency and security before a full launch.
Kinks to Iron Out
The initiative still faces numerous challenges. The BCBPI was first proposed in 2015; however, issues such as payment mechanisms, cost-sharing arrangements, and security protocols have hindered development progress.
“There isn’t really all that much trade between this group of countries,” said Hugh Thomas, Lead Analyst at Javelin Strategy & Research. “The main things they have in common are fast developing economies, save maybe Russia, and a general indifference to the U.S.”
Friendly Competitors
Internal competition among BRICS members also poses challenges. Countries like China and India often compete with each other.
“You’re talking here about harmonizing two countries’ monetary policies that tend to be geared to drive advantage over one another,” Thomas said. “My expectation is that they will continue to build spot solutions where they can find common cause on use cases and a willing audience, but business’s need for transparent systems in countries with independent regulators and a clear rule of law will keep most big flows on Swift.”