BRICS nations should link digital currencies, reducing dollar reliance: RBI
What's the story
India's central bank, the Reserve Bank of India (RBI), has proposed that BRICS countries connect their official digital currencies, according to Reuters. The move is aimed at simplifying cross-border trade and tourism payments. If approved, this would be the first time such a proposal would be put forward at a BRICS summit.
Summit agenda
RBI's proposal to be discussed at upcoming BRICS summit
The RBI has recommended that the proposal to connect central bank digital currencies (CBDCs) be included in the agenda for the 2026 BRICS summit, which India will host later this year. The BRICS group includes Brazil, Russia, India, China, and South Africa among others. This move comes amid rising geopolitical tensions and could lessen dependence on the US dollar for international transactions.
Previous commitments
Proposal builds on 2025 BRICS summit declaration
The RBI's proposal to link BRICS' CBDCs for cross-border trade finance and tourism is a continuation of a commitment made at the 2025 BRICS summit in Rio de Janeiro. The earlier declaration called for interoperability between member nations' payment systems to improve cross-border transactions. This new proposal from the RBI shows India's continued interest in enhancing digital currency connectivity among BRICS members.
Digital expansion
India's digital currency adoption and global ambitions
India's digital currency, the e-rupee, has gained 7 million retail users since its launch in December 2022. The RBI has been promoting the e-rupee by enabling offline payments and allowing fintech firms to offer digital currency wallets. Despite its global ambitions for the rupee, India has clarified that these efforts aren't aimed at de-dollarization but rather enhancing cross-border transactions with other countries' CBDCs.
Implementation hurdles
Technical and regulatory challenges for BRICS digital currency link
The successful implementation of BRICS digital currency linkages would depend on interoperable technology, governance rules, and methods to settle imbalanced trade volumes. However, reluctance among members to adopt technological platforms from other countries could delay progress on this proposal. One way to address potential trade imbalances is through bilateral foreign exchange swap arrangements between central banks, the sources said.
Growth trajectory
BRICS's expanded membership and economic aspirations
Founded in 2009 by Brazil, Russia, India and China, BRICS later expanded to include South Africa. It has since grown further with the addition of countries like the United Arab Emirates, Iran, and Indonesia. Despite past hurdles in becoming a major economic counterweight such as Brazil's common currency idea that was later scrapped, BRICS continues to be a key player on the global stage amid rising trade tensions.