Russian Vision of Global Financial System Presented at BRICS Financial Event

Russian Minister of Finance Anton Siluanov presented a Report on Improving the International Monetary and Financial System, prepared in conjunction with the consulting company Yakov & Partners, on 10 October.

The presentation took place during a high-level seminar attended by BRICS finance ministers and central bank governors, their deputies, and the world’s leading economists.

The Russian initiative calls for the international monetary and financial system to be reformed in accordance with four key principles: security, independence, accessibility, and sustainability.

“An independent and sustainable payment and settlement infrastructure is essential to the autonomy and financial sovereignty of BRICS. The proposals we have presented and refined with BRICS this year call for a quick, cheap, transparent, and equitable mechanism with minimal trade barriers,” Russian Minister of Finance Anton Siluanov said.

“BRICS countries represent more than 36% of global GDP. In 2006, it was only 22%. Despite the fact that developing countries participate in 63% of all world trade, the situation with investment is exactly the same: two thirds remain in developed countries. The gap also highlights the enormous potential in developing countries that current financial infrastructure prevents them from accessing,” seminar moderator, Yakov & Partners Expert and Partner, and Director of the Centre for Business Education and Analytics at Central University Ilya Ivaninsky said.

As part of Russia’s chairship of BRICS, the Russian Ministry of Finance, the Bank of Russia, and Yakov & Partners analyzed the 4 constituent components of the international monetary and financial system: payments, investments, reserves, and the GFSN (Global Financial Safety Net). The current system was created more than 50 years ago and is due for modernization.

“Recent crises in international trade and finance have highlighted the current system’s inherent flaws, which can in large part be traced to an over-reliance on a single currency and centralized financial infrastructure. Russia’s proposals call for alternative solutions that will ensure participants freedom of choice and also make it more efficient,” Yakov & Partners CEO Yakov Sergienko said.

The introduction of an improved international monetary and financial system is expected to increase the frequency of settlements in national currencies and kick start the development of new financial technologies. We can already see the beginning of these trends in Russia: close to 40% of foreign trade settlements are in rubles, and there is already a regulatory framework for the introduction of the digital ruble.

“We are now setting the course for BRICS future financial infrastructure. It will take time to build. BRICS member states need protective measures and alternative mechanisms. We expect to find payment and settlement solutions acceptable to all participants in the next year, and hope in the next 5 years to find other integrated financial market instruments, including insurance and credit ratings,” Anton Siluanov said.

The analytical Report of Russia’s BRICS Chairship on Improving the International Monetary and Financial System was presented to the heads of state at the 16th BRICS Summit in Kazan on 22-24 October.

The Roscongress Foundation manages the events of Russia’s BRICS chairship.