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TelegramBRICS Summit: Global financial structure may face great changes.
The 2024 BRICS Summit will be held in Russia from October 22nd to 24th. One of the focuses is to discuss whether the BRICS countries will launch their own settlement and payment systems, which may challenge the dominant position of the SWIFT system. This move may change the global financial structure, especially weaken the leading position of the US dollar in international trade. Russian SPFS system and China CIPS system are regarded as alternatives, and these two systems have been gradually applied to cross-border payment within BRICS countries.
SWIFT system
Swift (Society for Worldwide Interbank Financial Telecommunication) is currently the most widely used financial information transmission system in the world. It helps banks to transfer cross-border payment and transaction information. Although SWIFT itself does not handle funds, it is the main tool for banks to exchange payment instructions. Because of its wide coverage and high security, SWIFT is currently the standard of international financial transactions.
SPFS system
SPFS (System for Transfer of Financial Messages) is a financial information transmission system introduced by Russia in 2014 to replace SWIFT. The purpose is to deal with western economic sanctions against Russia. The function of SPFS is similar to that of SWIFT, but its international influence is small. With the strengthening of cooperation among BRICS countries, SPFS is expected to attract other countries to join and form a regional financial network.
CIPS system
CIPS (Cross-border Interbank Payment System) is a cross-border RMB payment system launched by China in 2015, aiming at promoting the internationalization of RMB and reducing the dependence on SWIFT. Although CIPS cooperates with SWIFT to transmit information at present, the long-term goal is to become an independent global payment system. With the increasing economic influence of China in the world, more and more countries begin to use CIPS for trade and investment settlement.
If the BRICS countries successfully launch their own settlement and payment system, and can be accepted by the global market, it will bring a huge impact on the US dollar and weaken its position in international finance.
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