A common feature that unites these five countries –
a constantly growing economy.
BRIC is an acronym for the developing nations of Brazil, Russia, India, and China – countries believed to be the future dominant suppliers of manufactured goods, services, and raw materials by 2050. As of 2010, South Africa joined the group, which is now referred to as BRICS.
BRICS is not a formal structure, rather it is a “club” on a world scale, within which developing countries exchange experience, develop joint projects, assist each other, both material and consulting.
27 Jun 2022
Iran and Argentina see potential in the Brazil-Russia-India-China-South Africa bloc
The Islamic Republic of Iran has officially submitted its application to join the group, the foreign ministry in Tehran announced on Monday. The move comes after the Iranian president addressed the BRICS summit last week, noting that the group accounts for up to 30% of the world’s GDP and 40% of the global population.
Argentina has also applied to join BRICS. President Alberto Fernandez on Friday urged the creation of cooperation mechanisms that could represent the alternative to ostensibly private institutions run by – and in the interest of – the West.
During the session on Wednesday, Russian President Vladimir Putin said that the five-member group was working on setting up a new global reserve currency “based on a basket of currencies of our countries.”
The BRICS Bank Strategy for 2018-2021
The New Development Bank (NBD), popularly known as the Bank of BRICS, was founded in 2014 and officially launched the following year. The institution has authorized capital of US$ 100 billion and can make annual loans of up to US$ 34 billion and aims to stimulate the development of emerging countries. The financial contribution and voting power of each member country are divided equally. The Bank’s headquarters is in Shanghai, China.
The construction of infrastructure for sustainable development consists of the main execution axis, receiving two-thirds of the funds available. The strategic plan involves five thematic areas: 1) clean energy; 2) irrigation, water management, and sanitation; 3) transportation and logistics; 4) sustainable urban development, and 5) cooperation and integration among member countries. The institution intends to gradually open its structure for the participation of new members, aiming at greater geographic and cultural diversity.
Of the seven projects and loans made to date, only one is not from the renewable energy area. It is intended to expand the project network to 75 by the year 2021, each with an average value of US$ 200 million. The first bonds issued by the NBD were demonstrated in the Chinese currency (Yuan-RenmmM), contributing to the process of internationalization of the same. The institution already has a partnership with the World Bank and intends to expand its network to induce other multilateral banks.
The five major emerging economies – Brazil, Russia, India, China, and South Africa – are developing a joint new payment system called BRICS Pay.
BRICS countries want to create a special online wallet to integrate the payment systems of its five member states, with Russia’s wealth fund reportedly working on the project alongside its partners from China and India, who have the necessary technologies to launch the system.
The service will be similar to existing Apple Pay and Samsung Pay, allowing users to pay with a smartphone app no matter what currency the customer’s account is linked to. A special cloud platform is to be created to link BRICS countries’ national payment systems.
BRICS own payment system is to significantly reduce the dependence on transnational payment organizations, which is especially important amid geopolitical tensions considering SWIFT is based in Belgium, but its board includes executives from American banks with US federal law allowing the administration to act against banks and regulators across the globe. Consequently, the integration of the national payment systems is a top priority for the bloc given financial market volatility and the dollar rate.
Central banks of BRICS countries have been working on developing a joint payment space, and excluding South Africa, have their own domestic national payment systems – China has UnionPay, India developed RuPay and Brazil has ELO. Instead of SWIFT, the financial messaging system SPFS will work as a “gateway” that facilitates cross-border payments between 11,000 financial institutions in more than 200 countries worldwide. In this sense, several states, including the EAEU (Eurasian Economic Union) countries and foreign banks are willing to join as an alternative to the traditional SWIFT sy stem. The first transaction on the SPFS network involving a non-bank enterprise was made in December 2017.