Russia as BRICS chair will push for unit of account to resolve problem of conversion - Siluanov

The solution to the problem of incomplete convertibility of currencies, in particular faced by Russia in its recently increased foreign trade with India, may be the creation of a unit of account on the BRICS platform, and Russia will promote this topic within the framework of its presidency, Russian Finance Minister Anton Siluanov said, Azernews reports, citing Interfax.

Russia will chair BRICS in 2024, with the summit to be held in Kazan in October. Currently, the association includes Brazil, Russia, India, China and South Africa, but a number of other countries have recently been invited to join BRICS.

"There is a problem [with settlements in foreign trade], indeed, our main trade partners today are China, India, Turkey, the Persian Gulf, in any case, all those friendly countries where trade flows have been reoriented. And while the Chinese yuan is convertible, and settlements in Chinese yuan are absolutely the same as in other convertible currencies, there is a problem with Indian rupees. Our Indian partners say - rather than having us pay you, invest this money in our economy. And a lot of people are doing that. But we say that let us return the proceeds for exported goods here, to Russia. And they say to us [Russian exporting companies] - what should we return, if they don't let us?" Siluanov said, answering questions from the audience of his lecture for young people, held at VDNKh.

There are interim solutions to this problem, but they are require expenses.

"Even for rupees, which are not fully convertible, solutions can be found. The simplest is settlement through third countries. Indians are always happy to work through the Chinese yuan. Such settlements happen through other currencies, including dirhams. India too trades with partners other than Russia and has a surplus or deficit in its trade balances. And somewhere rupees are deposited, and these rupees will be needed by other countries to buy goods from Indian partners, and somewhere vice versa - as in our case, we do not need rupees, because we do not have large imports from India, which would overlap with our export payments. Therefore, this scheme works through third countries, through the conversion of Indian rupees into other currencies and then into rubles. Financial entities are engaged in this, banks are engaged in this, etc. And it turns out as follows - if you have supplied goods to our partners from India and want to get money, rubles or other currency, you will have to accept a certain discount for it," the Finance Minister said.

Siluanov believes that a systemic way out of the situation should be sought on an international platform.

"We will chair the BRICS next year, and one of the topics that the Finance Ministry will state and work on with our colleagues is the creation of settlements and a unit of account that would solve issues of conversion, settlements, so that it would be possible, given trade operations between BRICS countries, not to have these problems," he said.

"By the way, one of the innovative proposals is to issue a digital financial asset on the basis of a certain basket of currencies of BRICS countries. A stablecoin backed by a basket of currencies of BRICS countries. This would be cool - we will settle within our system with the created unit of account backed by a basket of currencies of the member countries. That would be great. But it needs to be developed. There are a lot of details, a lot of issues that will need to be discussed with our partners. This is the topic that we are announcing in terms of the financial track within the framework of our BRICS chairmanship," Siluanov said.