Russia and Iran are keeping up the pressure for the BRICS bloc to establish an alternative to the SWIFT payment system and create a trading mechanism that would allow the group of large emerging economies to use currencies other than the US dollar.

The idea that was discussed in some detail at the two day summit of the BRICS nations in Johannesburg last year, underlining the serious intent driving the de-dollarisation movement.

That movement potentially challenges the dominance of the US dollar in the letter of credit (L/C) market as well as the euro in wider trade finance and investment markets (DC World News, 28 August 2023).

Russia's position

Earlier this month the Russian state-owned news agency, TASS, said the Kremlin had announced the idea of creating of a blockchain-based payment system for the BRICS bloc.

"We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain," Kremlin aide Yury Ushakov said in an interview with TASS.

Backing from Iran

The deputy governor of the Central Bank of Iran (CBI) meanwhile is also keeping up the pressure for the BRICS nations to develop their own alternative to the SWIFT payment system.

A unified BRICS financial system is needed, in which "the Iranian side can play a huge role", Mohsen Karimi told the Tehran Times, which is considered by some to be state-controlled and closely tied to the hardline factions within the Iranian government.

Karimi claims the proposal for the BRICS payment system is one initiated by the CBI, which is also proposing the group of large emerging economies establishes its own alternative to the Financial Action Task Force (FATF).

Out in the cold

Iran has been disconnected from SWIFT since the 2018 reimposition of sanctions due to Tehran's nuclear programme while many Russian banks have been barred from the international messaging system since Russia's invasion of Ukraine.

Russia and Iran signed a memorandum of understanding a year ago to use their own financial messaging system for bilateral trade between the two countries (DC World News, 3 February 2023).

Egypt, Ethiopia, Iran, Saudi Arabia and the UAE say they are joining the BRICS bloc - currently comprised of Brazil, Russia, India, China, South Africa - after being invited last year.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.