Brave New Money System? BRICS Bridge could process 20,000 transactions per second

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TL;DR,

• The BRICS digital currency aims to challenge dollar dominance as USD’s share of global FX reserves dropped from 70% in 2000 to 57.8% in 2024.
• The BRICS Bridge platform will connect member states’ financial systems using CBDCs and stablecoins, targeting 20,000 transactions per second to compete with SWIFT.
• The project faces significant challenges including governance alignment, regulatory frameworks, and the paradox of relying on dollar-backed stablecoins while trying to avoid USD dependence.

The BRICS digital currency, an ambitious plan to usurp the dollar’s dominance. The real question is, is it possible? What is the data backing this attempt, and how will it impact everyone?

Chairman of the Russian State Duma Committee on the Financial Market, Anatoly Aksakov, revealed that this isn’t a mere ambitious ideal. The core countries of BRICS are purposely reshaping their financial structures to accommodate cryptocurrencies, stablecoins and CBDCs eventually.

BRICS De-dollarization Explained: Progress and Metrics

Since its inception, BRICS(Brazil, Russia, India, China, and South Africa) has had one goal: to create a new allied force for actual development, elevate local currencies in trade, and diversify away from the dollar’s hegemony.

The coordinated efforts kick-started with projects like the BRICS Pay systems, an alternative system that encourages the use of virtual currencies. The allied nations have pushed for local currencies for bilateral settlements and even started thinking in terms of CBDCs in trade.

Their strategy focuses on various well-thought-out, but audacious moves, including:

• Repricing and settling trade in national currencies rather than dollars.
• Building digital rails that can clear and settle faster without traditional intermediaries.
• Exploring CBDC-based mechanisms that mirror cash-like finality for cross-border commerce.

The trend is visible, with the dollar’s share of global FX reserves falling from 70% in 2000 to 57.8% in 2024. Coincidentally, Russia-China ties showcased the most dramatic shift, with the yuan accounting for 545 of trading volume on the Moscow Exchange. In December 2023, roughly one-third of Russia’s foreign trade relied on the yuan.

In 2022, intra-BRICS trade grew steadily, reaching $614.8 billion, while the dollar’s share of cross-border banks among the regions fell from 67% in 2016 to 55% in 2024. The changes were evident with Russia’s export revenue and import payments in yuan surging by 36% and 37%. However, their most notable shift was the development of the BRICS Bridge.

Inside the BRICS Digital Currency and Brigde blueprint

Russian Deputy Foreign Minister Sergey Ryabkov presented an ideal strategy that doubles as a safeguard against the “anonymous” nature of cryptocurrencies while utilizing digital assets for better financial systems for trade among BRICS nations.

One idea, a “BRICS Bridge,” seeks to improve financial integration and speed transactions inside the alliance. The member states’ economic systems would be linked together using stablecoins or other forms of digital currency.

RELATED: BRICS Summit Welcomes Nations To Growing Economic Alliance

The BRICS Bridge is a cross-border platform designed to connect member states’ financial systems using stablecoins or CBDC. The platform prioritizes the latter as an alternative to fiat money as a form of “equality”, ensuring no single powerhouse dominates others.

Its technical specifications include a blockchain-based infrastructure targeting about 20,000 transactions per second, a direct competitor to SWIFT. As of the time of writing, the BIS-led Project mBridge (involving China, Hong Kong, Thailand, UAE, and Saudi Arabia) reached a minimum viable product.

The idea of a world without dollars is impractical, but having equally dominant systems is in the making with BRICS moving closer to secure autonomous trade agreements.

Typically, the platform would link CBDCs for global trade, complementing consumer-facing tools. BRICS pay generally represents the retail component having QR-code payments, wallets tied to domestic banks, and local-currency transactions. The intermediary unity would be the New Silk Road BRICS Token (NSRB); however, it’s still in development and is theorized to have $100 valuation supporting stability.

BRICS has considered several settlement assets. For instance, currency baskets akin to IMF SDRs, weighted by economic size and trade volume. This would, however, make China the prominent shareholder having of 52% of BRICS GDP.

Commodity-backed options, like gold-linked digital currencies, are another option, with BRICS having a collective hold of about 5,700 tonnes of gold, roughly 16% of global reserves. Brazil has also floated tokenizing commodities like soybeans and oil to collateralize stablecoins.

Risks, contradictions, and timelines

A BRICS digital currency is an ongoing solution; however, it does have its fair share of roadblocks. Cryptocurrencies have their fair share of skeptics, with Central Banks being the core opposers. The foundation is funding research and development as a vanguard for development. However, a key paradox persists: the sheer dominance of the dollar-backed stablecoins.

RELATED: Bitcoin as a Reserve Currency: Africa’s Financial Future or a Volatile Gamble?

The BRICS payment system aims to avoid using the dollar; however, dollar-denominating instruments don’t make it much different. Technical progress must be matched by governance and policy alignments to solve this contradiction. Additionally, the system is still roughly five years away from current development tracts. Developing standard legal frameworks is the next step; many global regulators still puzzle over how to adopt digital assets.

The BRICS countries want a multipolar world order distinguished by more diversity, resilience, and riches. They want to get there by encouraging communication and cooperation.

Achieving is no walk in the park with extensive catalysts reinforcing the push(U.S. monetary policy spillovers).

If governance can keep pace with technology, the BRICS digital currency strategy could steadily transform how value moves across borders.