SDG 9: Industry, Innovation and Infrastructure | SDG 17: Partnerships for the Goals
Ministry of External Affairs | RBI
BRICS Pay, a proposed cross-border digital payment system, is being developed by the BRICS member nations—including Brazil, Russia, India, China, and South Africa—to strengthen financial sovereignty and reduce reliance on the U.S. dollar. This initiative seeks to create an alternative global payment infrastructure that operates independently of Western-controlled mechanisms such as SWIFT and dollar-based clearing systems. Rather than establishing a single common currency, BRICS Pay is envisioned as a digital “unifying layer” that enables direct settlement in national currencies or future Central Bank Digital Currencies (CBDCs).
Strategic Objectives and Technical Framework
Geopolitical Necessity: The system aims to mitigate vulnerabilities to external shocks, frozen assets, and political pressures embedded in the current Western-centric financial architecture.
Interoperability of National Systems: BRICS Pay is designed to connect existing national platforms, such as India’s UPI, China’s CIPS, and Russia’s SWIFT alternatives, under a shared multilateral framework.
Blockchain-Based Efficiency: The platform utilizes Distributed Ledger Technology (DLT) and blockchain to facilitate real-time clearing and settlement, significantly reducing the multi-day delays typical of traditional transfers.
Multilateral Governance: Unlike current systems with concentrated power, BRICS Pay will operate under a model of shared oversight and decision-making to ensure neutrality among its diverse members.
Potential Applications and Implementation Challenges
Trade and Investment: The model is particularly suited for large-scale bilateral trade in energy, raw materials, and agriculture, where member states can settle transactions directly in currencies like rupees or yuan.
Tourism and Consumer Use: Future discussions include a BRICS-linked digital wallet allowing travelers to pay abroad using their home currency, bypassing international card networks.
Integration Complexity: Successful deployment faces technical hurdles in harmonizing diverse regulatory standards, banking practices, and levels of digitalization across member states.
Liquidity and Volatility: Ensuring sufficient liquidity in participating currencies and managing exchange-rate volatility remain critical barriers to widespread private-sector adoption.
What is ‘Interoperability’ in the context of the BRICS Pay ecosystem? It refers to the technical ability of diverse national payment infrastructures—such as India’s Unified Payments Interface (UPI) and China’s Cross-Border Interbank Payment System (CIPS)—to communicate, exchange data, and settle transactions seamlessly through a common digital interface. In the BRICS Pay framework, interoperability ensures that the alliance does not need to build an entirely new global network from scratch. Instead, it acts as a “unifying layer” that allows existing domestic systems to process cross-border payments under a shared set of rules and protocols, ensuring that a payment initiated in one country’s local currency can be accurately cleared and received in another country’s currency without exiting the BRICS digital environment.
Policy Relevance
BRICS Pay represents a strategic statement for India to maintain ‘Strategic Autonomy’ while leveraging its leadership in digital public infrastructure.
Strategic Impact:
Globalizing UPI: The framework provides a scalable pathway for India to integrate its world-leading UPI ecosystem into global trade, reducing the cost of international remittances and settlements.
Mitigating Sanctions Risks: As a major importer of energy and raw materials, India stands to benefit from a parallel settlement system that provides a buffer against geopolitical financial pressures.
Bridging Trade Deficits: Direct settlement in rupees can help India manage foreign exchange reserves more effectively and reduce the transaction costs associated with dollar conversions in bilateral trade.
Leadership in the Global South: By participating in the governance of BRICS Pay, India can shape the rules of the multipolar financial order to ensure they reflect the needs of emerging economies rather than just developed ones.
Relevant Question for Policy Stakeholders: How can the Reserve Bank of India (RBI) synchronize its Digital Rupee (e-Rupee) pilot with the BRICS Pay architecture to ensure that India remains the primary ‘technical standard-setter’ for the bloc’s CBDC settlement rails?
Follow the full news here: What Is BRICS Pay and How Does It Work?