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Cross-border Transactions: Challenges and Possible Solutions for BRICS

Author

Listed:
  • Igor A. Yakovlev

    (Financial Research Institute, Moscow, Russian Federation)

  • Antonina А. Tikhonova

    (HSE University, Moscow, Russian Federation)

  • Vsevolod Yu. Cherkasov

    (Financial Research Institute, Moscow, Russian Federation)

Abstract

The article critically examines the idea of a supranational accounting and settlement unit of BRICS. The theoretical and historical excursion brings us closer to understanding the nature of modern money and leads to the conclusion about the reasons why the national fiat unit serves as a means of international liquidity. The experience of European monetary integration is analyzed through the prism of the theory of the optimal currency area. The bottlenecks of international settlements and possible infrastructural solutions based on a central bank digital currency or multilateral clearing are considered. It is proved that multilateral clearing is an effective means of addressing the challenges in cross-border settlements, while the solutions leading to currency integration are possible only if the economic benefits exceed the damage to national monetary sovereignty.

Suggested Citation

  • Igor A. Yakovlev & Antonina А. Tikhonova & Vsevolod Yu. Cherkasov, 2024. "Cross-border Transactions: Challenges and Possible Solutions for BRICS," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 8-23, December.
    • Handle: RePEc:fru:finjrn:240601:p:8-23
    DOI: 10.31107/2075-1990-2024-6-8-23
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    References listed on IDEAS

    as
    1. Ivo Maes & Ilaria Pasotti, 2016. "The European Payments Union and the origins of Triffin’s regional approach towards international monetary integration," Working Paper Research 301, National Bank of Belgium.
    2. Lea Borchert & Ralph De Haas & Karolin Kirschenmann & Alison Schultz, 2023. "Broken Relationships: De-Risking by Correspondent Banks and International Trade," CRC TR 224 Discussion Paper Series crctr224_2023_478, University of Bonn and University of Mannheim, Germany.
    3. V. Yu. Cherkasov, 2024. "Wholesale Central Banks Digital Currencies and New Opportunities for Interbank Settlements with the Prospect of Entering International Transactions," Outlines of global transformations: politics, economics, law, Center for Crisis Society Studies, vol. 17(2).
    4. L. B. Vardomskiy, 2020. "Forgotten Integration: The Failure and Lessons of the Council of Mutual Economic Assistance," Outlines of global transformations: politics, economics, law, Center for Crisis Society Studies, vol. 13(3).
    5. Alexey Ponomarenko, 2023. "National Currencies in International Settlements: Main Mechanisms," Russian Journal of Money and Finance, Bank of Russia, vol. 82(3), pages 35-47, September.
    Full references (including those not matched with items on IDEAS)

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      Keywords

      BRICS; money; international liquidity; supranational currency; monetary integration; clearing; CBDC;
      All these keywords.

      JEL classification:

      • B11 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Preclassical (Ancient, Medieval, Mercantilist, Physiocratic)
      • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
      • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
      • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
      • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
      • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
      • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
      • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
      • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
      • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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