Cross-border payment systems are entering a phase of structural change. Advances in digital settlement technologies, alongside growing interest in currency diversification, have moved reform from concept to early architecture. Within this broader shift, BRICS has emerged as a key platform for cross-border payment experimentation, as India assumes its presidency.
BRICS Pay, unveiled at the 2024 Kazan Summit, and Project mBridge, which reached minimum viable product stage in 2024, signal that alternatives to existing cross-border systems are no longer theoretical. With intra-BRICS trade crossing $1.17 trillion, the question is no longer whether digital settlement systems are feasible. It is whether they will be adopted at scale and on what terms.
The answer lies less in technology than in financial economics. In cross-border payments, liquidity, convertibility, and institutional trust, rather than rails alone, will determine adoption.
Wholesale Corridors Will Drive Early Adoption
This distinction becomes clearer when examining where adoption is most likely to emerge. Near-term adoption is most plausible in wholesale segments such as energy trade, commodity exports, and government-linked transactions. These corridors combine high transaction values, limited counterparties, and existing bilateral arrangements.
The India–Russia energy corridor illustrates this logic. With over 90 percent of trade already denominated in rupees and rubles, the currency question is largely settled; what remains is improving settlement efficiency. Similarly, the India–UAE Local Currency Settlement System provides a foundation for corridor-based experimentation. Estimates from multilateral institutions suggest that CBDC-linked platforms could reduce cross-border transaction costs significantly, but in wholesale markets, cost savings alone are not decisive.
Liquidity, Convertibility, Trust Will Constrain Adoption
Even in favourable corridors, scaling remains constrained. Three constraints will shape whether these systems move beyond pilots.
The first is liquidity. CBDC corridors currently lack deep intraday liquidity, repo markets, and backstop facilities that make systems like SWIFT reliable for large-value transactions. Thin liquidity increases settlement risk, often outweighing marginal efficiency gains. Addressing this will require central bank swap lines and intraday facilities, but this introduces a trade-off, as greater liquidity support can imply greater financial interdependence.
The second limitation lies in convertibility. Non-convertible currencies such as the rupee and rouble limit counterparties’ ability to manage residual balances. The accumulation of rupee surpluses in Russia following post-2022 trade arrangements illustrates this constraint. CBDCs can accelerate settlement, but they do not resolve underlying currency risk. Bilateral netting arrangements can mitigate this, but only partially, and often at the cost of reduced flexibility.
A deeper challenge is institutional trust. Cross-border payments are not just technical systems; they are legal and contractual infrastructures. SWIFT reflects decades of accumulated precedent in dispute resolution, compliance, and enforceability. CBDC corridors must build similar credibility through a track record of transparent, successful settlements. Until then, incumbency will continue to command a premium in large-value transactions.
From Bilateral Pilots to Fragmented Systems
These constraints do not only affect adoption; they shape how the system evolves. India’s comparative advantage lies in sequencing. Bilateral corridors such as India–Russia and India–UAE offer controlled environments to test liquidity mechanisms, settlement protocols, and dispute resolution norms. However, bilateral success does not automatically aggregate into a multilateral system.
For that transition to occur, interoperability standards must enable different corridors to connect, legal frameworks must support consistent dispute resolution, and governance norms must balance efficiency with sovereignty. Without these, corridor-based expansion risks fragmentation rather than integration.
India’s Role is Foundational, Not Transformational
India’s BRICS presidency is unlikely to deliver scale, but it can shape direction. Progress should be measured not by transaction volumes, but by whether foundational constraints are addressed.
This includes initiating discussions on liquidity frameworks such as swap lines and intraday facilities, defining interoperability protocols that allow bilateral systems to connect without requiring uniform architecture, and establishing dispute resolution norms and transparency mechanisms that build institutional trust. Each of these involves trade-offs between sovereignty and interdependence, and between flexibility and standardisation. Without addressing them explicitly, technological progress will not translate into adoption.
CBDCs have shifted the frontier of what is technically possible. But cross-border payment systems scale only when they embed liquidity, credibility, and enforceability.
India’s opportunity is not only to build alternative rails, but to shape the conditions under which those rails become economically viable. Whether this moment leads to durable institutional change, or remains a series of pilots, will depend on how these constraints are negotiated, not just how platforms are designed.