BRICS Pay: the revolutionary payment system challenging global financial dominance
During the early years of the Russia and Ukraine war, a stage was set for a more divided world. Russia was cut off from the global infrastructure ranging from the internet and global payment system, SWIFT. Russia was ready for these changes. As a result the country could continue without relying on global internet through its internet infrastructure.
The treatment of Russia by global superpowers also signalled to aligned nations about what could happen to any country that was not aligned with global powers at a point of conflict or major disagreement.
Now BRICS is considering a payment system, BRICS Pay, that could enable BRICS nations to trade even if any of these nations are cut off from the global payment system, SWIFT. BRICS Pay and existing national and international payment systems are integral parts of a single ecosystem designed to enhance cross-border payment capabilities among BRICS nations, enabling seamless settlements.
The architecture of BRICS Pay envisions a more centralised structure within individual countries while maintaining a decentralised approach on an international scale. High-speed deployment, scalability, decentralization, and interoperability are achieved through the creation of distributed networks for transmitting both payment information and liquidity.
The system's core topology is a decentralised star-topology, represented as a connected graph with subgraphs—payment networks within each country. Participants in the settlement system can connect to various vertices (nodes) of transactions. These subsystems (subgraphs) represent existing or prospective payment systems, with local settlement banks located at the centres of these subgraphs. Each country may have multiple such banks. Additionally, within the implemented topology of BRICS Pay, participating banks can establish direct relationships with other foreign banks or other financial institutions.
What is the significance of BRICS Pay? Although the technology is still underdevelopment and may require further engagement with various countries before its adoption, this move is a great indicator that global powers will be shaken as an alternative global payment system emerges.
At the core of this move by BRICS is the creation of a payments infrastructure that is not dictated by powerful nations. The UNIT fractal monetary ecosystem introduces a practical approach to creating essentially “apolitical money” that can be freely used as a storage of value or currency for payments via any open payment and clearing system, while providing long-term purchasing power stability.
The UNIT ecosystem is proposed as a solution to the basic lack of trust problem stemming from the politicisation of the use of a single global currency and constraints on its use for valuation and settlement of trade and capital flows.
Essentially, this is part of moving away from the dollar as a “defacto” currency of the world. UNIT enhances sovereignty of individual states who no longer need to rely on other countries' domestic currencies for trade and foreign exchange reserves and can pursue independent domestic monetary policies, focused on growth and price stability, while retaining complete exchange rate and interest rate control.
Research conducted by BRICS member states over several years arrived at the conclusion that while the global economy functioned and expanded over several decades by relying on a single global currency for its trade, borrowing and investment needs, fundamental flaws of the post-Bretton-Woods system have never been adequately addressed. BRICS nations are working towards a new alternative global currency to make global trade and capital flows more resilient to external interference.
Wesley Diphoko is a Technology Analyst and Editor-In-Chief of FastCompany (SA) magazine.
BUSINESS REPORT