Brazilian President Luiz Inácio Lula da Silva using a smartphone. Photo: AP/Eraldo Peres.
The Office of the United States Trade Representative (USTR) has a new target in its sights: Pix, a Brazilian system that allows users to make and receive instant payments through an identification key.
A USTR document reflects the concern expressed by US companies regarding the alleged preferential treatment by the Central Bank of Brazil towards Pix, launched in November 2020, as, according to them, this could harm international providers of electronic payment services.
“Pix is from Brazil and nobody is going to force us to change it because of the service it is providing to Brazilian society,” said Brazilian President Luiz Inácio Lula da Silva during an event in the city of Salvador, Bahia (northeast).
Brazil’s Central Bank launched the system less than six years ago. Since then, more than 170 million people have adopted its use in the country, surpassing cash and cards. People can make payments or transfers individually, to retail stores, banks, and even government institutions.
An economic… and political tool
A payment system is a set of instruments, banking procedures and, generally, interbank systems for the transfer of funds that ensure the circulation of money, according to the definition of the Bank of Mexico.
In an interview with Sputnik, Josafat Hernández, a Mexican economist and PhD in Philosophy, stated that understanding the importance of payment systems requires understanding the role of the United States within them. Currently, the US controls the ecosystem of payment systems through SWIFT (Society for Worldwide Interbank Financial Telecommunication), which governs more than 11,500 financial institutions in over 200 countries.
“Thus, the United States has the ability to pressure different countries to exclude them from this international payments system, which is based on the dollar,” the Mexican analyst stated. ” This gives the US economy enormous power precisely to control capital flows, banking transactions between different banks and countries, and, in a way, to undermine what we might call the monetary sovereignty of other countries,” he added.
For example, in 2022, the United States and the European Union decided to exclude seven Russian banking entities from the SWIFT system as part of coercive measures against the Eurasian country, which withstood this onslaught thanks to Mir, the Eurasian country’s analogue of the international payment systems Visa and MasterCard, as well as national systems such as China’s UnionPay, Japan’s JCB, and others.
The need to create a sovereign system arose in the spring of 2014, when, in compliance with the sanctions imposed by the US after the reunification of Russia with Crimea, the Visa and MasterCard systems blocked bank card transactions from some Russian banks without prior notice.
To avoid any repetition of this scenario in the future, the National Payment Card System (NSPK) was created, tasked with two objectives: to create a national payment processing center for international issuers and to launch a Russian payment card on the market.
According to Oscar Rojas, PhD in economics, countries that invest in creating their own payment systems also do so for their monetary sovereignty.
“To the extent that countries have their own mechanisms and do not use third parties, especially when they are American, it speaks to gaining sovereignty and autonomy in this sense, which provides levels of national security … Neocolonialism, from the 20th century to the present, has been commanded through the imposition of international financial systems,” the analyst elaborated in a conversation with Sputnik.
A necessary step toward multipolarity
In a world increasingly trending toward multipolarity, it is necessary to consider other payment systems that also prioritize other currencies, Rojas said.
“If I, as a country in the Global South, for example, decide to trade with other countries in the Global South, what would a currency from the Global North be doing in the middle? That is, from this point of view, monetary sovereignty and financial sovereignty have to do with breaking with these intermediaries, and of course, dissolving the risk that exists, and that we have seen, that it is openly weaponized as a mechanism for economic blockades,” he reflected.
All of this, the expert added, creates the need to empower nation-states to seek independence and for their currencies to also have the option of participating within the global market system.
New Currency of Power: How the Global South Is Dismantling Dollar Supremacy
Dr. Josafat Hernández agrees, noting that, in addition to being healthy for nations to invest in technology for payment systems, it is a first step towards monetary sovereignty for countries.
“Brazil’s Pix system bothered the United States so much because it turned out to be a very efficient, very cheap payment system that could be a real regional alternative to the United States’ SWIFT system, and I think that could undermine the hegemony of the dollar,” he said.
Recently, the president of Colombia, Gustavo Petro, raised the possibility of adopting the Brazilian payment system, which in a few years has gained a significant market share in the country, which in turn is the most important regional economy.
“They [Brazil] have the capacity to defend their own monetary sovereignty, which is also part of national sovereignty … Brazil has a way of saying: ‘Here we do not align ourselves with imperialism, and the free self-determination of peoples rests with us.’ And I believe that, in that sense, reclaiming Pix becomes a matter of national security for Brazil and for other countries,” he concluded.
(Sputnik) by Daniela Díaz
Translation: Orinoco Tribune
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