In mid-November, representatives from the BRICS group of nations considered to be emerging economic powers met in the retro-futuristic city of Brasilia to discuss various topics, and one of the most interesting was related to how cryptocurrencies could play a part in their respective futures. Digital currencies were lightly mentioned during the 10th BRICS summit in Johannesburg last year, but the discussion this year had far more substance.
According to a Reuters news report from the summit, Russia is leading a proposal extended to Brazil, India, China, and South Africa that could unify these economies into a single payment system. Among the discussions of this proposal, which seeks to establish a level of independence from the United States dollar, was the possibility of using a cryptocurrency solution as the basis of this payment system.
The Russian Direct Investment Fund has very good reasons to present this proposal; after all, the economic sanctions imposed by the U.S. and NATO member nations following the annexation of Crimea in 2014 have created financial turmoil for Russia, a country that has been seeking to create an option that would allow circumvention of the SWIFT global money transfer system.
Not surprisingly, the BRICS bloc has become more active since 2014; Russia has taken a leadership role because of its relative isolation from some financial systems. Kirill Dmitriev of the RDIF explained that payments between BRICS members currently make up 20% of all foreign direct investment transactions, which are typically settled with U.S. dollars. It should be noted that Russian financial regulators have not been supportive of cryptocurrency trading or use within their borders, but this did not stop them from creating a digital version of the ruble using the Ethereum blockchain a couple of years ago.
Another major economic bloc that has been contemplating the development of sovereign digital currencies is the European Union, and the arguments in support of providing a digital version of the euro are quite strong. After Asia, the EU is the most active region in terms of digital payments, and regulators in the bloc would prefer that these payments are made with sovereign digital currencies as opposed to alternatives such as Bitcoin.