Paytm payment gateway: India: BRICS settlement mechanism may remove China or vote against it, 4 countries take sides

One of the key issues at the upcoming 16th BRICS summit in October is the discussion on "de-dollarisation". However, even before the Chinese delegation's plane landed, there was already disagreement within the BRICS: India plans to exclude China. Will India's obstruction change the new BRICS settlement mechanism?

According to Indian sources, at the BRICS summit in October, countries will endeavour to promote the use of their own currencies for transactions. This proposal is undoubtedly significant good news for countries that have been deeply affected by the financial policies of the United States.

As a result, trade between countries will become smoother and simpler, and cooperation among BRICS members will be further strengthened. This is particularly favourable for the five new member countries that joined in January this year. All countries are deeply in favour of reducing their dependence on the United States dollar.

From the perspective of the international market, the U.S. dollar accounts for nearly 50% of global payments and settlements, and has ruled the world for half a century. Tired of the "harvest" and control of the dollar, the BRICS countries are eager to break this situation. "De-dollarisation" and the establishment of their own currency settlement system have become the common and urgent desire of the BRICS countries.

According to Russian sources, the BRICS countries have become the most dynamic international co-operation organisation in the world, with an economy that exceeds that of the G7 and accounts for 35.6% of the world's GDP.In addition, the BRICS countries' vast land area, demographic advantages, rich oil resources and relatively complete industrial manufacturing chains make it necessary for them to establish their own settlement mechanisms to protect their interests and financial security.

In this regard, Russia is one of the most pressing countries, with the comprehensive sanctions imposed on it by the West since the Russia-Ukraine conflict resulting in its exclusion from the SWIFT payment system and challenges to its economic and trade transactions with other countries.

The construction of the new settlement system is said to employ advanced digital technology, opening up new opportunities for global economic development. According to media reports, the new settlement system has already won the favour and trust of more than 160 clients. It seems that countries around the world are eager to "de-dollarise".

However, just as everyone was about to eagerly welcome the official launch of the new settlement system, India broke the mould. Modi argued that two amendments needed to be made before the new settlement system could be introduced:

Firstly, India will not be bound by the proposal and will be free to choose its currency-settled member countries. Second, India would have the right to "remove" China from its transactions with other BRICS countries. If these two points are not met, India will vote against the proposal at the BRICS summit in Kazan.

It appears that India is willing to use local currencies, such as the rouble-rupee, for transactions with other BRICS countries, but is reluctant to use the renminbi. Moreover, the new payment and settlement system has been supported by all BRICS members except India. So where does India get the courage and confidence to "go against the grain"?

According to some analysts, India has always regarded China as a "rival competitor" and has wanted to curb its influence in the international community. As a result, India has always deliberately stirred up trouble and blocked any proposal made by China. As one of the original founding members of BRICS, India has completely lost its grace and tolerance. India's recent deliberate absence from a number of meetings involving China is an all-too-clear sign of its "small-mindedness".

However, India's deliberate attempt to contain and suppress China's development will not be effective. The trend towards the internationalisation of the RMB is irreversible. Since last November, the RMB has been overtaking the Japanese yen to become the fourth most traded currency in international payments. We know that the RMB accounted for less than 0.11 TP3T in 2010, and in just 15 years, it has risen to nearly 51 TP3T, which is a testament to the potential of the RMB in the international market as well as the rapid and steady growth of China's economy.

China's steady economic growth is evident to the world. For example, in response to the West's sweeping financial sanctions against Russia, the renminbi's share of the Russian foreign exchange market reached 99.61 TP3 T. Similarly, in other countries, China continues to strengthen its cross-border trade and further liberalise its financial markets, leading to the renminbi's growing share of global payments and positively enhancing its international payments position.

Goldman Sachs boldly predicts that in about a decade, China will overtake the United States as the world's largest economy. By then, the US will no longer have its international edge. The BRICS countries are perceptive; with the exception of India, they are all actively seeking to strengthen their co-operation with China.

India is just one country in the 10-nation BRICS and does not play a decisive role in the overall BRICS landscape. The Modi government's strong statements will only become a laughing stock for other countries.