The Meeting in Kazan, Russia and the future of BRICS

The Meeting in Kazan, Russia and the future of BRICS

Carlos Madrid^[1] , OBELA^[2]

In October 2024, the 16th BRICS summit was held in Kazan, Russia. One of the central themes was financial cooperation, which consisted of increasing trade in local currencies, which would benefit from reducing transaction costs, avoiding US trade sanctions and reducing payment processing times. In addition, it allows for greater exchange rate stability because it avoids the dollar's instability. The policies have been present since 2014, with the petroyuan and previous proposals for the creation of a currency basket for Latin America. These advantages are relevant because of the degree of trade integration between the BRICS and their partners, which has increased recently.

In February 2025, the first annual meeting of the BRICS Sherpas took place in Rio de Janeiro, Brazil. The meeting followed up on proposals from the Kazan summit, such as trade facilitation and the negotiation of payment platforms in national currencies, as well as creating a partnership to eradicate tropical diseases and mitigate climate change.

This article will discuss how more significant trade and financial integration can contribute to increased trade flows within the bloc through payment mechanisms in local currencies.

In Kazan, the BRICS added new official members (BRICS+), such as Indonesia, Egypt, Ethiopia, Iran and the United Arab Emirates, and twelve associate countries (which have a voice but no vote), namely Algeria, Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan and Vietnam. In this way, the bloc has gained more international presence. The bloc now represents 45.2% of the population and 33.9% of the world's territory. If we add the BRICS+ partner countries, its GDP is equivalent to 42.8% of the world's GDP, which is higher than that of the G7, according to data from the World Economic Database.

Table 1 demonstrates the significant role of trade within the bloc, with China being the most influential country. Despite only 8.6% of its trade being directed towards the BRICS, this translates to USD 565 billion for the bloc, nearly a third of intra-BRICS trade. This underscores the potential for local currency exchanges and the promising future of BRICS financial cooperation.

Anton Siluanov, Russian finance minister, told a 2024 meeting with leading BRICS financial officials and central bankers in Moscow that from January to September 2024, the BRICS settled 65% of their trade in their own currencies. In 2023, Brazil and China traded in national currencies for the first time. In the same year, the Export and Investment Promotion Agency (ApexBrasil) disclosed an agreement to conduct transactions in their domestic currencies. China and Russia conducted 92% of all bilateral transactions in the same way in 2024.

In addition, in November 2024, the China Development Bank signed an agreement to lend 5 MMRMB to Brazil's National Bank for Economic and Social Development (BNDES). The precedent for these measures is in Latin America. The Central Bank of Brazil signed the first agreement for payment of national currency with the Banco Nacional de Argentina in October 2008. Since 2009, these measures have been extended to the whole of Mercosur. 

As of February 2024, Egypt ceased using the dollar for trade transactions, marking a significant shift. Similarly, in 2024, India signed an agreement with the central banks of the United Arab Emirates, Indonesia and the Maldives to promote transactions in their currencies

, further reducing the reliance on the dollar.

Several proposals concerning financial architecture were mentioned at the Kazan conference. Although they are in the process of being finalised, they show the group's strategy of moving away from the dollar.

            Russia's proposal of a cross-border payment system, BRICS Pay, is a promising development. This system, which would facilitate online transactions in local currencies through an app and QR codes, is set to revolutionize digital currency use in international trade. The platform, operating through a network of commercial banks connected via their central banks, is currently in the development phase.

In addition, the central banks of China, Saudi Arabia, Hong Kong and Thailand have introduced the mBridge project. It is a platform dedicated to cross-border transactions between central and commercial banks via CBDCs (central bank digital currencies). Clients can purchase Digital currency on the platform and transfer the funds directly to the recipient bank, eliminating the need to use a third-country foreign bank account or correspondent banks. The project entered the minimum viable product (MVP) scheme in mid-2024 and is still under development. The use of domestic digital currencies would complement the existing architecture for international trade.

Thus, local currency operations, together with the new financial architecture proposed by the BRICS and the use of digital currencies, favour greater trade flows and, in the context of competition between major powers, strengthen the Eastern bloc and, more generally, the Global South.