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BRICS: We must be ready for a collapse of the global financial system, according to a representative of the IMF

Last Friday, the Russian representative at the International Monetary Fund, Alexei Mozhin, warned that the BRICS countries should prepare for a possible collapse of the dollar and the international monetary system.

Mozhin suggested the creation of a currency based on a basket of currencies of the five member states, namely the Chinese yuan, the Indian rupee, the Russian ruble, the Brazilian real and the South African rand.

"This proposal is currently under discussion. If the dollar and the international monetary system collapses, the proposed BRICS unit of account may have to become a real currency"

Mozhin stated.

The BRICS countries have long expressed their desire to abandon the dollar and encourage the use of their national currencies. Earlier this year, Ivan Chebeskov, Russia's deputy finance minister, stressed the need for payments in national currencies between BRICS countries. He also highlighted the importance of developing new payment mechanisms and sharing experience in the development of central bank digital currencies (CBDC).

Essentially, the BRICS aim to create a payment system to rival the SWIFT network using CBDC. To achieve this goal, projects such as mBridge and Agora, initiated by the Bank for International Settlements in Basel, are underway.

The possibility of creation of a CBDC consisting of five different currencies is, however, questionable. Some argue that relying on a bank controlled by Western powers may not produce the desired results. Also, the idea of ​​creating a complex CBDC system may be too ambitious.

An alternative proposal being raised is the adoption of Bitcoin, as the coin functions as both a currency and a payment system, offering a simplified solution. However, challenges remain to the widespread adoption and regulatory acceptance of cryptocurrencies globally.

8th May 2024


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