The 16th annual BRICS Summit, 2024, kicked off today in Kazan, Russia. The Russia-hosted summit will see the participation of several powerful world leaders, including Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and Chinese President Xi Jinping. The summit is crucial for Russia as the country faces serious economic sanctions from the West.
A recent report claimed that Russia wants to show its geopolitical and economic strength against the West through the BRICS summit. Many believe that at the summit Russia will present a proposal for creating an alternative financial system and payment network using blockchain technology.
BRICS Summit 2024: Why is it important?
Although the BRICS was originally a union of five fast-growing economies, including Brazil, Russia, India, China and South Africa, it now has nine members, with Egypt, Ethiopia, Iran and the UAE recently joining the group. Saudi Arabia, which has also been invited to the current summit, is expected to join the union in the near future.
To understand the power of this union you only have to analyze these two factors: population density and economic strength. This union represents at least 45% of the world’s population and almost 28% of the world’s economy.
The Russian plan for a new financial system
The latest summit, as mentioned earlier, is of particular importance for Russia as it plans to challenge the dominance of Western-backed institutions such as the IMF through the BRICS. At this meeting, Moscow is likely to push for the creation of a blockchain-backed digital token system backed by national currencies. This system could challenge the dominance of the US dollar in the global economy as it would allow BRICS countries to make payments without having to rely on the US currency.
For Russia, it is both a political and economic strategy to circumvent the economic sanctions imposed on the country by the West after the invasion of Ukraine.
If such a payment system is created, it may not be easy for the Western powers to disrupt Russian business relations with the BRICS countries.
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What impact will this have on the crypto market?
As BRICS countries look for alternatives to the dollar, cryptocurrencies may become more important as cross-border payment instruments. A new BRICS-backed digital token system could also accelerate the wider adoption of blockchain technology, creating opportunities for crypto-based payment networks.
In short, as BRICS countries explore alternatives to Western-dominated financial systems, the global economy – and the cryptocurrency market – could see significant shifts.
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