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Link to gold planned in BRICS trade settlement system
BRICS Countries May Present Instruments for Trade Settlements at Summit in Kazan
From Tass, Moscow
Friday, September 6, 2024
https://tass.com/economy/1839865
MOSCOW -- The BRICS countries are developing a wide range of instruments for creating an inclusive international financial system, and some of them may be announced this autumn at the summit in Kazan, Andrey Mikhailishin, the head of the task force on financial services of the BRICS Business Council, told TASS.
"We are preparing a presentation of some solutions for the autumn BRICS summit, in the retail and b2b segments," Mikhailishin said on the sidelines of the forum "Digital Finance: New Economic Reality."
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He also confirmed that a list of projects has been determined, including a common unit of account (Unit), a platform for international settlements in BRICS digital currencies (Bridge), a payment system (Pay), a settlement depository (Clear), an insurance system (Insurance), and a BRICS rating alliance.
The key principles in designing the new financial system are decentralization of international interaction and the use of digital technologies. In particular, Mikhailishin noted that BRICS Clear will "use blockchain to record securities and exchange them."
The design of a common unit of account uses the experience of the transferable ruble of the countries of Comecon (the Council for Mutual Economic Assistance of the countries of the former Soviet bloc).
"When we talk about a counterpart of the transferable ruble, we mean that settlements but not the storage of balances are made in national currencies," he explained.
The Unit project assumes that the value of the common unit of account is pegged by 40% to the value of gold, and by the remaining 60% to a basket of national currencies of the BRICS countries. This approach can make it a convenient and universal instrument, Mikhailishin said.
"When you have a unit of account that can be converted into any national currency, it is more convenient for you to hold it, since it is a more liquid instrument," he said.
A common unit of account would solve the problem of exchange-rate volatility that occurs when cash balances accumulate from settlements in national currencies.
"If everything is done in national currencies, then as a result we are left with many billions of rupees, Egyptian pounds, and we do not know what to do with it," Mikhailishin added.
The BRICS summit in Kazan is scheduled for October 22 through 24.
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