A former chancellor of the Exchequer has issued a warning about the potential impact of a separate banking payments system being considered by Brics countries.

The alliance, which includes , , India, Brazil, and now also South Africa, Iran, Egypt, the UAE, and Ethiopia, could undermine international sanctions, according to Lord Lamont of Lerwick. He expressed his concerns after Russian President revealed plans to move away from the dollar-dominated economy at the recent Brics summit.

Speaking to the House of Lords, Lord Lamont cautioned: "While the idea of a Brics payments system, which was announced by Mr Putin at the Kazan Brics conference, may seem rather fanciful and a long way off, nevertheless it needs to be taken seriously." He added that such a system would pose a "major threat to the Western-led financial system" and could render sanctions ineffective against nations like Russia, China, or Iran.

In response, Financial Secretary to the Treasury Lord Livermore advocated for a unified global financial system, highlighting that "Fragmentation is damaging to the global economy, whereas deep liquid markets boost economic efficiency. That is why we will continue to work with our international partners to strengthen the rules-based international system and our interconnected financial and economic systems."

He went on: "I won't comment on the specific proposals announced by the Brics countries. I wouldn't want to speculate as to what systems may or may not come into common usage."

"What I will say is the Government believes very much that the current international model of the financial system works effectively and that we will continue to work with our international partners to maintain an interconnected financial and economic system."

"On the question of sanctions effectiveness, of course we continue to believe that economic sanctions are an important and effective tool and will continue to utilise those sanctions where necessary."

"In terms of the potential to undermine them, we will pursue any necessary steps with our allies to maintain the interconnected system and to reduce opportunities for the circumvention or evasion of international sanctions."

Lord Lamont expressed concerns about reports claiming the Brics payment system would utilise from the Bank for International Settlements (BIS), which has been working on a cross-border payments platform called Project mBridge. Nevertheless, BIS has clarified that there is no involvement between Brics and mBridge.

BIS general manager Agustin Carstens clarified: "mBridge is not the 'Brics bridge' I have to say categorically. mBridge was not created to cater to the needs of the BRICS. It was put together to satisfy broad central bank necessities."

"We at the BIS I think this an opportunity to set the record straight we always try to be a good global citizen. And the BIS does not operate with any countries, nor can its products be used by any countries that are subject to sanctions. This will continue to be the case. And all central bank members are in this mindset that we need to be observant of sanctions and whatever products we put together should not be a conduit to violate sanctions."

Lord Hannay of Chiswick, a former top diplomat, has cautioned that President-elect Donald Trump's push for major tariffs could quicken the Brics nations' stride toward their own path. The independent crossbench peer stated: "If the President-elect of the US goes ahead with some of the more extreme versions of his tariffs ideas, this is likely to add momentum and an impetus to the attempts by the Brics to break away from the financial system that currently exists."

Liberal Democrat peer Baroness Kramer criticised the inefficiency of the current international payments system as "hapless" She suggested that if the Brics countries develop a superior alternative, it would inevitably attract a surge of users.

She said: "Because of my complex family, I need to transfer funds across international borders several times a year. The system assumes I'm a terrorist, the banks have rip-off charges and exchange rates and obstructive technology, and even the new online apps for which I had high hopes have very severe limitations."

"Do Western governments, including ours, understand that, if they fail to remedy this absolutely hapless international payments system and the Brics devise any international payments system that's even halfway efficient and reasonably priced, users will simply flock to the Brics system out of sheer frustration? ".

Lord Livermore stated that he didn't think commenting on the future policies of the Trump administration would be "appropriate", but stressed that the UK will "work closely with the US on a range of security issues, including sanctions".

Addressing Lady Kramer's grievances about the inefficient international payments system, Lord Livermore said: "I share some of her frustrations in this regard; I'm always happy to vouch for her that she's not a terrorist, I'm very certain of that fact."

He also acknowledged the critical implications of her points, adding: "There is obviously an extremely serious point that she's making and fragmentation along the lines that she describes would be very damaging to the global economy. We must ensure that doesn't proceed."