BRICS treads carefully on de-dollarisation: Finance track talks payments, not a common currency
The finance track of the BRICS Business Forum, held alongside the 18th BRICS Summit in New Delhi, focused discussion on payment-system cooperation and local-currency trade settlement rather than a proposal for a single common BRICS currency.
Statements at the forum reiterated that the bloc's near-term goal is interoperability between existing national payment systems — not the creation of a shared reserve currency to rival the US dollar.
As chair in 2026, India has consistently opposed a common BRICS currency proposal while supporting incremental steps such as bilateral local-currency trade settlement and linking of domestic payment rails.
The New Development Bank's ongoing shift toward local-currency lending was cited as a complementary, already-operational strand of the de-dollarisation effort, distinct from the payments-system discussion.
Local Currency Settlement (LCS) vs a Common Currency
Local Currency Settlement means two trading countries invoice and settle transactions directly in their own currencies (e.g., rupee-ruble trade) instead of routing through a third reserve currency such as the US dollar. This differs fundamentally from a "common currency" proposal, which would require a shared monetary unit, a common central bank or currency board, and convergence of monetary policy across member states — something the Eurozone required for the euro (1999) but which BRICS members, with widely divergent economies (from Ethiopia to Saudi Arabia to Russia), have explicitly rejected as impractical.
Key Details
- RBI operationalised a Rupee Vostro Account mechanism for international trade settlement in rupees via its July 2022 circular, enabling invoicing, payment, and settlement in INR
- India has active rupee-trade arrangements with Russia and several other partners; this is LCS, not a shared currency
- A common currency would require monetary policy convergence and a shared central authority — the precondition that made the euro (launched 1999, physical currency 2002) workable within the EU but is considered infeasible across BRICS' more divergent economies
- India, as 2026 chair, has publicly maintained its rejection of a common BRICS currency, keeping the agenda centred on payment interoperability
The Business Forum's finance-track framing — "payments, not a common currency" — reflects this consensus: BRICS is pursuing achievable plumbing-level cooperation (settlement and payment rails) rather than the far more complex monetary-union route.
Cross-Border Payment Systems and BRICS Pay
Beyond bilateral LCS, BRICS members have been developing interoperable payment infrastructure to reduce reliance on dollar-denominated, SWIFT-routed transactions. This effort — informally referred to as "BRICS Pay" — aims to link national instant-payment and messaging systems (India's UPI, China's CIPS, Russia's SPFS, Brazil's Pix) so that transactions can move directly between national systems without conversion through the dollar.
Key Details
- SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the dominant global messaging network for cross-border bank transfers; it is not itself a payment system but a messaging standard, and Western sanctions have at times cut off access to it (e.g., select Russian banks after 2022)
- CIPS (China's Cross-Border Interbank Payment System) and SPFS (Russia's System for Transfer of Financial Messages) are SWIFT alternatives built by individual BRICS members
- UPI (India's Unified Payments Interface, launched 2016, operated by NPCI) has been the subject of bilateral linkage discussions with several countries for cross-border retail payments
- The 2026 New Delhi Summit is the target milestone cited for advancing interoperability discussions among these national systems
- Intra-BRICS trade settled in local currencies has reportedly risen substantially over recent years as bilateral LCS arrangements have expanded, though a fully unified BRICS-wide settlement platform remains a work in progress rather than a completed system [Unverified — precise interoperability completion status]
The Business Forum's emphasis on "payments" over "currency" is precisely this workstream — linking existing sovereign payment rails is technically and politically far more achievable than building new shared monetary infrastructure, which is why it dominates the finance-track agenda.
New Development Bank (NDB) and Local-Currency Lending
The NDB, BRICS' multilateral development bank, has been progressively increasing the share of its lending denominated in members' own currencies rather than the US dollar, as part of the bloc's broader de-dollarisation approach applied to development finance rather than trade settlement.
Key Details
- NDB established 2014 (Fortaleza Summit), operational since 2016, headquartered in Shanghai
- The NDB's General Strategy (2022-2026) targets 30% of all bank financing in members' local currencies, up from roughly a quarter in earlier years
- The NDB has issued local-currency bonds, including South African rand-denominated bonds and plans for rupee-denominated issuances, to fund local-currency lending without dollar intermediation
- NDB local-currency lending reduces foreign-exchange risk for borrowing countries on long-tenor infrastructure projects, a distinct rationale from the payments-interoperability discussion
The NDB's currency diversification is the "already happening" half of de-dollarisation that the Business Forum could point to as a working example, in contrast with the more nascent payments-interoperability and hypothetical common-currency ideas.
Reserve Currency Theory — Why De-Dollarisation Is Contested
The dollar's dominance as the world's primary reserve and trade-invoicing currency rests on deep, liquid US financial markets, the size of the US economy, and network effects (most global trade is already dollar-invoiced, so switching costs are high). Economist Robert Triffin's "Triffin Dilemma" (1960s) holds that a reserve-currency issuer must run persistent current-account deficits to supply the world with its currency, which over time can undermine confidence in that very currency — a structural tension often cited to explain why some countries seek alternatives to dollar dependence, while others note that no BRICS currency currently offers comparable liquidity, convertibility, or trust to replace it wholesale.
Key Details
- Triffin Dilemma: articulated by Belgian-American economist Robert Triffin in the 1960s; describes the conflict between a reserve issuer's domestic monetary needs and its global currency-supply obligations
- "Exorbitant privilege" — a term attributed to French official Valéry Giscard d'Estaing describing the US's unique ability to borrow cheaply and run deficits due to dollar reserve status
- The US dollar remains the dominant currency in global reserves and trade invoicing; no single BRICS currency (yuan, rupee, ruble, real, rand) currently offers comparable full convertibility and depth of financial markets
- China's renminbi has grown as a reserve currency component (included in the IMF's SDR basket since 2016) but remains a minority share of global reserves compared to the dollar
This theoretical grounding explains BRICS' cautious, incremental approach — full de-dollarisation via a common currency is not currently feasible given liquidity and convertibility gaps, which is why the finance track deliberately confines itself to payments infrastructure and bilateral local-currency settlement rather than a currency substitute.
- NDB local-currency lending target: 30% of all financing under its 2022-2026 General Strategy
- NDB founding capital: $50 billion subscribed (2014), authorized capital $100 billion; HQ Shanghai
- CRA (2014): $100 billion total commitment; up to 70% of drawdown beyond the basic tranche linked to IMF conditionality
- RBI's Rupee Vostro Account mechanism for international trade settlement: operational since July 2022
- Renminbi included in the IMF Special Drawing Rights (SDR) basket since 2016
- India (2026 BRICS chair) has explicitly ruled out backing a common BRICS currency
- UPI (India), CIPS (China), SPFS (Russia), Pix (Brazil) are the national payment/messaging systems central to interoperability discussions