The COVID-19 pandemic and consequent economic crisis have altered global trade. One of the profound changes has been the shift towards digital payments.
With this shift, Central Bank Digital Currencies (CBDCs) are rapidly gaining ground, with all BRICS nations in the process of researching or adopting such options. The CBDC offers great opportunities to promote financial inclusion while also disrupting the traditional banking architecture in these countries.
The new financial infrastructure could also promote cross-border financial services but is dependent on countries recognising the need to promote integration and currency interoperability. There is a need for focus, planning and coordinated action by Central Banks, financial institutions of BRICS countries that require the involvement of international standard institutions. As the BRICS develops these currencies in test environments, it is important to collate the research that addresses interoperability and international exchange issues.
The BRICS will need to investigate the potential of using multiple CBDC bridging technologies and other alternatives to promote international trade and foreign investment from the outset before the currencies are formally adopted. Making changes to these systems at a later stage will prove to be more expensive. To enable international trade through the CBDC, one must explore the broad dimensions of system interoperability and the arrangements that the Central Banks must consider to implement such structures.
This conference explores these ideas, developing policy recommendations for the BRICS.
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