BRICS vs. SWIFT: New Development Prompts International Payment Alternatives
Innovate how you manage and make international paymentsWhat is BRICS and its purpose?
BRICS, a group of fast-growing economies challenging the West’s global economic leadership, stands for Brazil, Russia, India, China, and later added, South Africa. BRICs main objectives are to cooperate between the member nations for development, provide financial assistance, support various projects, and infrastructure. It has also agreed to provide financial assistance support to countries other than its members.
Why is BRICS important?
BRICS partners are trying to develop cross-border alternatives to U.S. dominated payments systems such as SWIFT. The BRICS initiative is driven by the rise in cross-border trade and a desire to find non-dollar alternatives to international payments systems vulnerable to sanctions by the U.S. government.
What does this new BRICS development mean for banks and corporations?
Banks participating in the potentially sanctions-busting alternative to SWIFT could risk retribution from the U.S. who could use it’s might to exclude sanctioned banks and corporations from the global banking infrastructure as international banking transactions involving multiple currencies require conversion into U.S. dollars.
This necessitates the use of U.S. based intermediary banks and SWIFT, which countries such as China, Russia, Iran, and Turkey argue enables countries targeted by the latest U.S. foreign policy to be excluded from international trade.
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