Currency conundrum: On the BRICS New Delhi Declaration
The New Delhi Declaration, adopted at the 18th BRICS Summit held in New Delhi on 12-13 September 2026, backs deeper cooperation on settling bilateral and multilateral trade in members' own national currencies rather than the US dollar.
The declaration mandates the BRICS Payment Task Force to accelerate work on cross-border payment messaging and interoperability between member countries' payment and financial-messaging systems.
BRICS has opted for this incremental, infrastructure-building approach to reducing dollar dependence rather than pursuing the creation of a single common BRICS currency, which remains off the table.
Analysts note that expanding local-currency trade is not a straightforward policy choice for India, given practical constraints around currency convertibility and trade-balance mismatches between BRICS members.
The Special Rupee Vostro Account (SRVA) Mechanism
A vostro account is an account a domestic bank holds on behalf of a foreign bank, denominated in the domestic currency. India's Reserve Bank enabled rupee-denominated trade settlement through a July 2022 circular allowing Authorised Dealer banks to open Special Rupee Vostro Accounts (SRVAs) for correspondent banks of partner countries, letting foreign firms pay for Indian exports directly in rupees and use the balance to buy Indian goods or invest in Indian assets.
Key Details
- The RBI circular was issued under powers granted by the Foreign Exchange Management Act (FEMA), 1999.
- Banks from more than 20 countries — including Russia, Sri Lanka, Mauritius and the UAE — have since opened SRVAs with Indian counterparts.
- The exchange rate for such rupee-settled trade is market-determined, not fixed by government fiat.
The SRVA framework is India's concrete instrument for the kind of "local currency settlement" the New Delhi Declaration endorses at the BRICS level — but it also illustrates the declaration's caution: where a BRICS partner (such as Russia) runs a large trade surplus with India, rupees accumulating in its vostro account cannot be easily repatriated or fully utilised, since there isn't enough matching Indian import demand from that partner to absorb the balance.
New Development Bank's Local-Currency Lending Mandate
The New Development Bank (NDB), the BRICS-established multilateral lender headquartered in Shanghai, has progressively increased the share of its lending denominated in members' own currencies rather than the US dollar, to reduce currency-mismatch risk for borrowing member states.
Key Details
- NDB was established under the 2014 Fortaleza Declaration and became operational in 2015; founding members are Brazil, Russia, India, China and South Africa on an equal-shareholding basis.
- The bank has issued bonds in local currencies (including South African rand) and has targeted raising local-currency lending to around 30% of its portfolio.
- This complements the BRICS Contingent Reserve Arrangement (CRA), a separate $100 billion currency-swap facility set up in 2014-15 for balance-of-payments support among members.
The New Delhi Declaration's local-currency push operates on two tracks simultaneously — trade settlement (via mechanisms like SRVA) and development lending (via NDB) — both aimed at reducing dollar exposure without needing a shared currency.
SWIFT Dependence and Alternative Payment Messaging Systems
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the dominant global network carrying cross-border payment instructions between banks; most of its message traffic is dollar-denominated settlement. Western sanctions excluding several Russian banks from SWIFT after 2022 sharpened BRICS interest in alternative payment-messaging infrastructure.
Key Details
- Proposed alternatives discussed under the BRICS umbrella (sometimes referred to as "BRICS Pay" or "BRICS Bridge") envision decentralised, national-currency-based messaging systems that could eventually interoperate with central bank digital currencies.
- These systems remain at a study/pilot stage; the New Delhi Declaration's language commits only to accelerating the BRICS Payment Task Force's technical work, not to launching an operational system.
- Any such system would need to solve the same convertibility and settlement-imbalance problems that already constrain bilateral rupee trade.
The Declaration's payment-infrastructure mandate is the institutional vehicle through which BRICS intends to eventually scale local-currency settlement beyond bilateral arrangements like India-Russia rupee trade — while explicitly stopping short of a shared BRICS currency.
- 18th BRICS Summit: New Delhi, 12-13 September 2026; New Delhi Declaration adopted on the opening day.
- RBI's Special Rupee Vostro Account mechanism: introduced via circular, July 2022, under FEMA, 1999.
- Countries with banks holding SRVAs with India: 20+, including Russia, Sri Lanka, Mauritius, UAE.
- NDB established: 2014 (Fortaleza Declaration); operational from 2015; local-currency lending target: around 30% of portfolio.
- BRICS Contingent Reserve Arrangement: $100 billion currency-swap facility, set up alongside the NDB.
- BRICS has explicitly not committed to creating a single common currency as of the 2026 Declaration.