No proposal for BRICS currency as of now, says MEA
India's Ministry of External Affairs stated, on the sidelines of the 18th BRICS Summit, that there is currently no proposal within BRICS for a common BRICS currency.
The Ministry's Secretary (Economic Relations) said discussions have instead been ongoing for some time on settling bilateral trade in local (national) currencies rather than creating any new shared unit.
Local currency settlement was described as a practical mechanism to lower transaction costs in bilateral trade, complementing the existing global payment and settlement system rather than replacing it.
Other BRICS chairship-year outcomes cited alongside this clarification included a BRICS MSME cooperation portal and frameworks on global value chains and logistics cooperation.
Local Currency Settlement (LCS) vs. a Common Currency
Local Currency Settlement (LCS) is a bilateral trade mechanism in which each side invoices and pays in its own domestic currency rather than routing payments through a third "vehicle" currency such as the US dollar. This is conceptually distinct from a common currency, which would require pooled monetary sovereignty and a shared central authority — something BRICS has never formally proposed.
Key Details
- The RBI operationalised its own LCS push through a July 2022 notification enabling international trade settlement in Indian Rupees, since extended through Rupee Vostro Account arrangements with partner-country banks (used with countries including Sri Lanka, Russia, and others).
- LCS covers current-account transactions and permitted capital-account transactions, with the exchange rate market-determined rather than fixed.
- A December 2021 RBI Inter-Departmental Group (report released July 2023) recommended a phased roadmap for rupee internationalisation, including expanding Rupee Vostro accounts, exploring SDR-basket inclusion, and linking the Rupee to regional settlement systems such as the Asian Clearing Union (ACU).
The MEA's clarification draws exactly this LCS/common-currency distinction — BRICS members are pursuing bilateral local-currency trade arrangements (a decentralised, opt-in mechanism) rather than any single "BRICS currency" requiring monetary union.
BRICS Financial Architecture: NDB and the Contingent Reserve Arrangement
BRICS' concrete financial institution-building predates and is distinct from currency proposals — it consists of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), both created to reduce dependence on Bretton Woods institutions without touching currency sovereignty.
The absence of a BRICS currency proposal is consistent with how BRICS has historically built financial cooperation — through lending and reserve-support institutions (NDB, CRA) rather than monetary union, a distinction the MEA's statement reinforces.
De-dollarization as a Process, Not a Single Currency Event
"De-dollarization" refers to a gradual diversification away from US dollar dominance in trade invoicing, reserve holdings, and payment settlement — a broader global trend BRICS discussions on local-currency trade sit within, without requiring any single alternative currency.
Key Details
- The US dollar remains the dominant global reserve currency and trade-invoicing currency by a wide margin, per IMF COFER data, meaning local-currency arrangements are supplementary rather than substitutive at present.
- Payment infrastructure projects such as India's UPI-linkage agreements with partner countries and proposed BRICS payment-system interoperability initiatives are cited as parallel, incremental steps toward reduced dollar-transaction dependence.
- Analysts and officials distinguish "de-dollarization of trade settlement" (achievable incrementally via LCS) from "de-dollarization of reserves" (a much slower, structurally harder shift), a distinction useful for Mains answers on international monetary reform.
The MEA's statement frames BRICS' currency-related work squarely as incremental de-dollarization of trade settlement — a narrower and more achievable goal than the "BRICS currency" framing often used in political commentary.
- MEA statement: no BRICS common-currency proposal exists "as of now"; local-currency trade settlement is the actual mechanism under discussion.
- RBI enabled Rupee-based international trade settlement via notification dated 11 July 2022.
- RBI Inter-Departmental Group on rupee internationalisation: constituted December 2021, report released July 2023.
- NDB and CRA: both established 2014 (Fortaleza Summit); CRA reserve pool up to USD 100 billion (China $41bn, Brazil/India/Russia $18bn each, South Africa $5bn).