BRICS to Lay First Tracks for New Global Payment System

BRICS is developing a payment infrastructure that will allow member states to settle trade directly in their own central bank digital currencies, offering an alternative to the dollar‑centric SWIFT network. 

BRICS Payment Rail Concept 

The proposed system will connect the digital rupee, digital yuan and digital ruble through a shared messaging layer. Each currency remains under national control, but the infrastructure enables instant settlement between banks without correspondent intermediaries.  

The design aims to lower transaction costs, speed up clearance and reduce exposure to sanctions that can arise from using the dollar network. 

India’s Role and CBDC Interoperability 

India, as the summit host, is driving the move from theory to policy. The Reserve Bank of India stresses that the digital rupee is a state‑backed cash equivalent, not a crypto asset, and that interoperability will preserve monetary sovereignty.  

Experience from earlier bilateral deals with Russia, which left large rupee balances unusable, highlights the need for a multilateral hub where earned currencies can circulate freely. 

Read More: South Africa Considers Up to 50% Tariffs on Vehicles from China and India! 

Settlement Mechanisms 

Two key tools will underpin the rail. Settlement cycles aggregate all payments between two countries over a set period, so only the net amount is transferred.  

For example, if Indian imports from China total ₹500 billion and Chinese imports from India total ₹400 billion in a month, only the net ₹100 billion moves. Foreign exchange swap lines act as a liquidity backstop, allowing central banks to borrow partner currency temporarily to meet net obligations. 

Dollar Dominance and Systemic Risks 

The dollar still accounts for about 59% of global foreign exchange reserves and underpins 58% of international payments. Global debt totals roughly $315 trillion, with 64% denominated in dollars. A slowdown in demand for dollar assets could raise rates, increase US debt servicing costs and tighten worldwide financial conditions. 

Implementation Challenges 

Legal harmonisation, technical standards and governance arrangements remain unresolved. Most CBDCs are still in pilot phases, and linking disparate national platforms will require robust cybersecurity and clear dispute‑resolution protocols. Participation is voluntary, and success depends on aligning regulatory frameworks across members. 

Conclusion 

BRICS is laying the initial tracks for a payment rail that links national digital currencies, offering a practical alternative to the existing dollar‑based system. The initiative focuses on infrastructure rather than a single bloc currency, aiming to enhance settlement efficiency while preserving monetary sovereignty. 

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