RTFri, 28 Jun 2019 10:11 UTC
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Russian President Vladimir Putin has called on Brazil, Russia, India, China and South Africa (BRICS) to develop settlements in national currencies instead of the commonly used currencies like the US dollar.
"Cooperation in terms of developing the use of our national currencies in international settlements seems very promising," Putin said in Osaka, Japan at a meeting of BRICS leaders in advance of the G20 summit.
Five-nation bloc BRICS represents more than 40 percent of the world's population. The five countries have a combined nominal GDP of US$18.6 trillion, which is about 23 percent of the gross world product.According to International Monetary Fund estimates, member states are responsible for more than half of the global economic growth of the last 10 years.
According to the Russian president, the integration of payments systems and the establishment of an independent channel on information exchange could facilitate the stability of the banking systems of the five countries. "I think this is extremely important today," he said.
Russia welcomes further expansion of the operating activities of the BRICS New Development Bank (NDB), which has already financed 35 investment projects worth more than $9 billion, Putin said.
The Shanghai-based bank NDB provides funding for infrastructure and sustainable development projects in emerging economies. It was established in 2014 and formally opened for business a year later.
Comment: More from RT: Russia & China agree to increase use of the ruble and yuan
Moscow and Beijing have inked an intergovernmental agreement to switch to national currencies in bilateral trade and boost cross-currency settlements up to 50 percent as they ramp up efforts to move away from the US dollar.
The document was signed by Russian Finance Minister Anton Siluanov and the head of the People's Bank of China, Yi Gang, earlier in June, Izvestia reports.
Moscow and Beijing are currently developing new mechanisms of cross-border payments between Russian and Chinese businesses, the newspaper said, citing a letter from Deputy Finance Minister Sergey Storchak to Anatoly Aksakov, the head of the financial market committee of the State Duma (lower chamber of Russia's parliament). The two sides may settle payment gateways between their domestic alternatives to the traditional SWIFT system, Russia's System for Transfer of Financial Messages (SPFS) and China's Cross-Border Inter-Bank Payments System (CIPS).
The two countries will have to develop ruble and yuan financial instruments to boost cross-currency trade and mitigate risks of exchange rate fluctuations, according to Aksakov. He added that in the coming years, the share of settlements in national currencies between Russia and China could increase fivefold - from 10 to 50 percent.
The mechanism of payments in national currencies is set to be developed by next year. At first, major companies with state participation from sectors such as energy and agriculture will switch to it. The yuan-ruble payments will also be made on existing contracts which stipulate settlement in dollars.
Comment: More from RT: Russia & China agree to increase use of the ruble and yuan