BRICS Bridge a platform for national currencies trading

In collaboration with the central banks of the other BRICS countries, Russia is developing the BRICS Bridge platform for trade settlements in national currencies, including digital ones, according to Deputy Finance Minister Ivan Chebeskov.
This could be, for example, a digital ruble, yuan or rial or one of the other currencies of a BRICS member.
This new system will facilitate direct transactions between countries, reducing the impact of Western sanctions on international payments. This is particularly pertinent in light of the new restrictions against the Russian equivalent of SWIFT. The Russian Payments system ,the Special Financial Message Transmission System (SPFS)

At the beginning of this year, four new states joined BRICS. The group, which already included Brazil, Russia, India, China and South Africa, was joined by Egypt, Ethiopia, Iran and the UAE. The situation with Saudi Arabia is not entirely clear. In late 2023, it was reported that the kingdom would join BRICS, but officials since then it has not confirmed joining the group as a full member. That said However, Riyadh continues to cooperate closely with the Nine.
Meanwhile, 29 additional candidates have expressed interest in joining the association in some capacity. These include Azerbaijan, Algeria, Belarus, Vietnam, Kazakhstan, and Turkey.

In light of the sanctions imposed by Western countries, the leaders of all the BRICS member countries agreed that there is a pressing need to develop tools for independent settlements between the BRICS countries, according to Alexey Dolmatov, member of the General Council of Business Russia and co-chairman of the committee for the construction of Business Russia.
He added that payments between the Russian Federation and the countries of Southeast Asia are occasionally blocked by the threats of secondary sanctions by the USA.

Alexey Dolmatov explained that a single platform based on digital and financial assets will make payments impersonal and, as a result, independent. He believes this will help reduce the influence of third countries like the USA on international settlements.

The creation of such infrastructure will also enhance the competitive advantage of the BRICS countries, as Russia is at the forefront of financial technology, according to a member of the General Council of Business Russia. Furthermore, he noted that international transactions from the Russian Federation via SWIFT currently take weeks to complete.

The innovation is particularly pertinent in light of the new restrictions being imposed in the West. The EU sanctions package, effective as of 14 June, prohibits European organisations from connecting to the Russian analogue of SWIFT, the Financial Message Transmission System (SPFS).
As a result, foreign companies may be reluctant to utilise the mechanism due to the risk of falling under secondary restrictions, warned the founder of Anderida Financial Group, Alexey Tarapovsky.
Russia and its partners are exploring alternative options for settlements. For example, the single digital currency BRICS was designed to link its exchange rate to a basket of currencies of the member states of the association.

Moscow has also proposed another option for making payments: for central banks to issue digital financial assets similar to tokens. This was reported by Finance Minister Anton Siluanov in June. According to him, various types of security for such assets are currently being considered. One option is to link them to national currency rates.
The Russian authorities have been considering the establishment of a payment system for the BRICS countries for some time, according to Finam FG analyst Alexander Potavin.
Over the past year, they have been actively promoting the concept of digital asset-based payments. This should streamline payments for goods and services between developing countries, the expert commented. In March, President Vladimir Putin signed a law that permits the utilisation of digital financial assets (DFAs) for international transactions.

Banks in the BRICS countries are increasingly reluctant to facilitate payments from Russia due to concerns about secondary sanctions from the US and EU, according to O2Consulting senior partner Tatyana Safonova. In a normal situation, bank secrecy should protect information about transactions, according to her. However, given current market practices, new forms of digital payments are still more anonymous than traditional methods.

If the BRICS countries are prepared to use the ruble for transactions, then the digital form of the national currency offers several advantages. The expert went on to explain that such operations are more technologically advanced, cheaper and faster.

The new platform will facilitate direct settlements between partners from different countries using digital national currencies, according to Timur Iskandarov, Senior Director, Head of the Project and Structured Finance Ratings Group at ACRA.
He also believes that this will result in a significant increase in transaction speed and a reduction in the number of intermediaries. In general, the project initiators view it as a competitor to SWIFT, according to the expert.

In 2022, the largest Russian banks were disconnected from the international system.
The issue of calculations intensified at the end of December 2023. This is a result of the 12th package of measures being introduced against our country. At that time, Chinese banks began to decline payments in dollars from Russia, given the ease with which such transactions can be traced in the United States. Subsequently, a number of Chinese credit institutions ceased to accept yuan transactions. Against the backdrop of the risk of secondary measures, Turkey and the UAE have also initiated restrictions on settlements with Russia.

Alexey Tarapovsky from Andera Financial Group has stated that the launch of a new platform for payments in national currencies, including digital ones, will require all BRICS countries to implement the necessary legislative changes.

Test transactions using digital national currencies are expected to commence in 2025, according to Timur Iskandarov of ACRA. He anticipates that Russia, China and India will be the first to launch them. The system will be used more widely once the platform is established, conversion mechanisms are developed and business processes are defined. This is estimated to take approximately two years.

He further elaborated that the new platform will initially facilitate the launch of payments for energy resources and other minerals. As the system develops, digital national currencies will be able to be used as a means of payment in parallel imports, and then to pay for supplies of consumer goods. Iran may also be one of the first countries to launch this project with Russia, according to Alexander Potavin from Finam Financial Group. He added that since about 80% of all Russian oil is now sold to India and China, significant volumes of these flows can also be transferred into settlements through the new platform.