BRICS+ Can Build Joint Payments System, But Shared Currency Faces Big Hurdles

BRICS+ countries should push ahead with a joint cross-border payments mechanism to reduce reliance on the US dollar, a think tank report published on Friday said. The report added that a shared BRICS+ currency would face significant economic and institutional obstacles.

The report was released by non-profit policy platform BRICS+ Thinking. It urged the expanded grouping of major emerging economies, led by Brazil, Russia, India, China and South Africa, to commit to developing the payments mechanism and take the necessary steps to ensure its implementation.

Central bank support and technical infrastructure

The authors, Gregory T. Chin, Danny Quah and former Goldman Sachs economist Jim O'Neill, who coined the BRICS acronym, stressed the importance of central bank support. They also highlighted the need to establish the technical infrastructure required to make the system operational.

Cross-border payments have long featured on the BRICS agenda. Efforts to integrate the financial infrastructure of member countries have made limited progress.

September summit pledge

In a declaration following their September summit in India, BRICS leaders pledged to continue working towards faster and cheaper cross-border payments. The pledge included linking national payment systems and greater use of local currencies.

The report said a common payments mechanism is considered achievable. A shared BRICS+ currency is a harder proposition. It would require extensive economic and institutional reforms across member countries.

What it means for dollar reliance

The push to cut dollar reliance is relevant to Nigerian businesses that trade across borders. Any credible alternative payments channel could matter for importers and exporters, even if a shared BRICS+ currency remains a distant prospect.