Putin plans to end dominance of US dollar

Ahead of the 16th annual summit of leaders of BRICS to be hosted by Russia, Putin also said the time has not come yet for a common BRICS currency but added that the 10-nation bloc is exploring the use of digital currencies for which his country is working with India and other nations.

Russia, which was slapped with sweeping sanctions by the US and its allies in the aftermath of the conflict with Ukraine that erupted in February 2022, wants to circumvent the global financial system by creating a new payments system based on a network of commercial banks linked to each other through the BRICS central banks.

Advocating a cautious approach in creating a new reserve currency due to differences in the structure and quality of the economies of the BRICS member states, Putin said these countries should focus on the use of the national currencies, new financial instruments and the creation of an analogue of SWIFT.

Prime Minister Narendra Modi is scheduled to attend the summit in the Tatarstan city of Kazan on October 22 and 23.

It will also be the first ever summit of the grouping after its expansion with the entry of Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates (UAE). Brazil, Russia, India, China and South Africa are the original members of the BRICS. “At this point of time it (a BRICS currency) is a long term prospect. It is not under consideration. BRICS will be cautious and act gradually, move slowly. The time has not come yet,” Putin told a select group of senior editors from the BRICS member states at a media interaction on Friday at his official residence in Novo-Ogaryovo, about 50 km from Moscow. The Russian strongman’s remarks came in reply to a question about plans by the BRICS — a grouping conceived as a geopolitical and geoeconomic counterweight to the West — to create a reserve currency.

Replying to a question, Putin said the BRICS was now studying the possibility of expanding the use of the national currencies and creation of instruments that would make such work safe. In particular, the BRICS states were considering the possibility of using electronic instruments, he added…Putin said the grouping will have to come up with a toolkit that will be under the supervision of the respective BRICS institutions.

“It may be another very good step in the development of the Global South with our direct active engagement. We will be talking about that during the (Kazan)summit. We are already in consultations with the Chinese and the Indian friends with the Brazilians. Also, we have had a round of consultations with South Africa.” On a potential BRICS reserve currency, Putin said the member states needed to work gradually without haste.

“Considering their population the BRICS economies in terms of structure should be comparable and more or less equal. Otherwise, we will face even bigger issues than those that occurred in the European Union (EU) for one when a single currency was introduced to the countries whose economies were not comparable and not equal. So it is a long term prospect,” he said. The Russian president also underlined the need for establishing relations between the central banks and to ensure reliable exchange of financial information that is independent of those international instruments of international information exchange that introduce “certain restrictions for political reasons and violate the principles of global economy.”  Putin mentioned that Russia, along with other BRICS members, has already been working on a SWIFT-like financial messaging system and the use of national digital currencies in financing high-growth investment projects.