Ambassador at large of Russia’s Foreign Ministry Pavel Knyazev revealed this week the BRICS countries are working to establish a new reserve currency they can use to facilitate trade, which will be based upon a basket of the five-nation-bloc’s currencies.

During a discussion about the Shanghai Cooperation Organization and expanding the BRICS bloc, Knyazev said, “The possibility and prospects of setting up a common single currency based on a basket of currencies of the BRICS countries is being discussed.” He went on to explain the member nations are looking at various mechanisms to exchange financial information which would allow them to develop a reliable alternative method for international payments.

Despite facing the headwinds of the pandemic and the conflict in Ukraine, BRICS’ member nations have been watching trade steadily increasing, as they have been strengthening their economic ties and building the bloc’s international standing. Now, in forming a reserve currency and the joint financial infrastructure underlying it, they are looking to reduce the dependency of member states on the dollar and the euro.

Russia has been developing a number of financial services and products, which have eroded the traditional dollar dominance in global financial transactions, most of which have been produced in response to Western sanctions limiting the country’s access to these traditional systems.

The country has produced a competitor to the SWIFT system which has been rolled out to 440 institutions in 13 countries so far. Russia has also developed a competitor to Visa’s and Mastercard’s credit card service, named the Mir payment system. In addition Russia has struck numerous deals to engage in trade in local currencies, bypassing the traditional trade in dollars.