Paper: GS – II, Subject: International Relations, Topic: Regional and Global Grouping, Issue: BRICS vs SWIFT.
Context:
Since 2014, BRICS has built independent financial institutions and cross-border payment systems to reduce reliance on SWIFT and enhance financial sovereignty against sanctions.
Key Takeaways:
| Origin & Evolution: 2001 Coined as “BRIC” by economist Jim O’Neill (Goldman Sachs) to describe emerging markets.2009 First formal BRIC summit in Russia.2010 South Africa joins BRIC becomes BRICS. 2024 Iran, Egypt, Ethiopia, and the United Arab Emirates attended their first summit as member states in 2024 in Russia. 2025 Indonesia officially joined as a member state, becoming the first Southeast Asian member. |
Building BRICS’ Own Financial Architecture:
- 2014 Fortaleza Summit: Launch of the New Development Bank (NDB) development financing
- Contingent Reserve Arrangement (CRA) lender of last resort
- These were the first major financial institutions created by developing countries.
Currency Cooperation Initiatives: 2015–2017: BRICS began exploring increased use of national currencies in intra-BRICS trade. Agreed to cooperate on:
- Currency swaps
- Local currency settlements
- Local currency investments
These measures aimed to reduce reliance on the US dollar in trade and finance.
| What is SWIFT? Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a secure financial message carrier. The SWIFT is a global member-owned cooperative that is headquartered in Brussels, Belgium. It was founded in 1973 by a group of 239 banks from 15 countries which formed a co-operative utility to develop a secure electronic messaging service and common standards to facilitate cross-border payments. It transports messages from one bank to its intended bank recipient, it carries an average of approximately 26 million financial messages each day. |
BRICS Pay: Challenging the SWIFT-Dominated System
BRICS is steadily advancing alternatives to the dollar and SWIFT, but internal competition and geopolitics affect the pace. Still, strong post-2024 momentum shows the bloc moving closer to a parallel financial system.
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