BRICS countries, such as Brazil, Russia, India, China, and South Africa, are deliberating the launch of a new reserve currency using blockchain technology to store and transfer digital tokens. It will be backed by their respective currencies.

According to reports, the proposal has come from Russia, a leading member of the group as it seeks to convince other members to build an alternative platform for international payments that would be immune to the hegemony of the West.

The purpose of having BRICS currency is to ensure safe and secure transactions among this group of emerging economies while also bypassing the United States (US) dollar. Russian President Vladimir Putin sees it as a solution to increasing problems in settling trade payments.

Putin, in his address, also highlighted that new economic opportunities will be created by integrating digital currencies not only for BRICS nations but also for other developing economies.

This switching of traded currency is part of BRICS’ long-term goals, which are to evade the dependence on the US dollar in international trade and solidify the economic cooperation among emerging markets of BRICS.

The final Kazan declaration of BRICS 2024 also stated, “We recognise the widespread benefits of faster, low cost, more efficient, transparent, safe and inclusive cross-border payment instruments built upon the principle of minimizing trade barriers and non-discriminatory access. We welcome the use of local currencies in financial transactions between BRICS countries and their trading partners.”

While experts believe the BRICS cryptocurrency model might not be feasible, there also are concerns that non-Chinese members might increase their dependence on China’s yuan instead, leading to a rift between Beijing and Moscow.

Notably, there have been talks of the potential launch of a Yuan-backed stablecoin as well.

Except for India, Pakistan shares good relations with all BRICS countries and has already been trading with China in Yuan. According to a Profit report, Pakistan and China’s Yuan trade increased to over 14 per cent in 2023, up from just two per cent in 2018.

While cryptocurrency remains an alien phenomenon in the economic corridors of Pakistan, the launch of such a currency could certainly open new trade avenues. This, however, is subject to approval for Pakistan’s inclusion in BRICS.

With Pakistan making a formal request to join BRICS in 2023, all eyes were on the summit to find out if Islamabad’s bid would be accepted this year. Russia’s Deputy Prime Minister Alexei also expressed his support to Pakistan’s membership of BRICS during his visit to Islamabad in September.

Foreign relations experts deemed India as a big hurdle in this process but chances became bright when reports from across the border suggested that India will give a nod to this inclusion. “One of the key takeaways of the summit is likely to be India’s green signal to Pakistan’s long-pending bid for membership in the bloc,” ABP Live reported.

The BRICS alliance has already expanded to include Iran, Egypt, Ethiopia, the United Arab Emirates, and Saudi Arabia.

After Pakistan’s application for membership in August 2023, Turkiye, Azerbaijan, and Malaysia have also formally applied to become members, while a few others also showed interest in joining.

During the summit, Indian Prime Minister Narendra Modi expressed India’s support for the inclusion of new countries into the bloc. He said that during his remarks at the Closed Plenary of the 16th BRICS Summit in Russia’s Kazan on October 23.

He further added that this process should happen only through consensus among all nations. “India is ready to welcome new countries into BRICS as Partner Countries. In this regard, all decisions should be taken by consensus, and the views of BRICS founding members should be respected. The Guiding principles, standards, criteria and procedures adopted during the Johannesburg summit, should be complied with by all members and partner countries,” he said.

While analysts see this as a bid to thwart Pakistan’s inclusion in BRICS, a formal response remains awaited.