Authors: Edberg D. Cheeran and Chris Teres Jos*
In 2026, the global financial system is witnessing a shift that could alter the functioning of world trade. As India has taken up the BRICS (Brazil, Russia, India, China, South Africa) chair from January 2026, the Reserve Bank of India (RBI) has submitted a proposal to the Union government to place the linking of Central Bank Digital Currencies (CBDCs) of BRICS countries on the agenda for the 2026 BRICS summit, which India is set to host later this year. With the BRICS expansion that began in January 2024, the bloc’s influence grew further when it added Iran, Ethiopia, the United Arab Emirates (UAE), Egypt, and Indonesia as full members in January 2025. As it expands, the BRICS is becoming more inclusive, with more member countries and diverse geopolitical considerations in a multipolar world order. This expansion, which includes major energy producers and key players in global trade, helped BRICS overtake the G7, turning into a potential stable influencer in the Global South as a decisive voice in financial governance.
The RBI’s proposal gives due attention to interoperability of the Digital Rupee (e-₹) with its CBDCs. Instead of promoting the creation of a single shared supernational currency, this approach aims to interconnect the existing national currencies, such as India’s e-Rupee and Brazil’s Drex. The objective is to facilitate faster, smoother cross-border payments for trade, tourism, and financial transactions using CBDCs issued by member nations without compromising on national monetary sovereignty. Instead of relying on traditional systems like SWIFT (Society for Worldwide Interbank Financial Telecommunication) or similar networks, a digital currency would enable direct settlement between national digital currencies. The primary reason the RBI is pursuing this proposal is the collective desire to reduce dependence on the US dollar. For decades, the dollar has been the world’s primary reserve currency and the main element of international trade.
However, the BRICS members are increasingly cautious about the use of sanctions and the SWIFT messaging system to cut countries off from the global economy. By proposing a “Digital Currency”, BRICS aims to create a system where a trader in India can pay a supplier in Brazil using their respective CBDCs, thereby eliminating the need for an intermediary currency, such as the dollar, that acts as a “middleman” and reducing transaction costs. Not only would it encourage monetary sovereignty, but it would also speed up the settlements. Local currency transactions also strengthen the domestic financial systems by increasing demand for national currencies in international trade. This idea followed the BRICS 2025 summit in Rio de Janeiro, which encouraged the development of an interconnected payment system to speed up and simplify trade. This could strategically bring India’s rural producers into the global value system through digital finance. When exporters settle transactions in CBDCs without the costly dollar conversions, pricing becomes more competitive.
The RBI recognises, in its stated proposal, the need to create interoperable technology standards so that different CBDCs can communicate securely, common governance mechanisms to set rules, and arrangements to handle trade imbalances across currencies. India and the UAE had previously signed a deal to link their CBDCs and jointly run pilot programs, according to an RBI press release. India’s e-rupee, with 70,00,000 retail users since its 2022 launch, and China’s BRICS member intent to expand global use of its digital yuan show the growing interest among members in adopting digital currency.
The stance on interdependence with the US dollar is shared by the BRICS members, whose global trade varies among the member states. Russia and Iran, who see the BRICS digital alternative as a necessity for survival, strongly support the idea of de-dollarisation amid the heavy Western sanctions that they face. At the same time, China views this as a way to promote the internationalisation of the e-CNY (Digital Yuan) and challenge the US financial hegemony. Whereas India and Brazil support the idea of the multi-currency trade, thereby not necessarily wanting to eliminate the dollar completely, but want to protect themselves from the potential risk of external policy shifts. While the RBI is leading the proposal for a digital connect, India has maintained a cautious, balanced position, consistently clarifying that it is not in favor of a common BRICS currency to replace national currencies nor of promoting de-dollarisation.
The US has historically viewed the dollar’s status as high and as a pillar of its national security and economic dominance. Noting the rise in some shifts, the US response has been a mix of diplomatic pressure and economic threats, which trap countries and international organisations into taking steps to suppress the dollar’s dominance through international trade. US President Donald Trump has warned of “100% tariffs” on BRICS nations that actively work and support to replace the dollar. The more the US threatens sanctions, the more motivated the BRICS nations become to build a system devoid of this intermediary interference. He labelled the BRICS efforts as “anti-American”. In 2025, the US also issued an executive order that prevents federal agencies from issuing or endorsing a domestic CBDC, citing risks to privacy and financial stability as justification. The BRICS initiative on digital currency comes at a sensitive time, with the US-India trade deal in limbo after being postponed due to Trump’s tariffs, which have heightened tensions in existing trade.
While internal differences exist regarding de-dollarisation, there is a focus on the need for diversification and the creation of common mutual governance. Digital currency initiatives and local currency transactions provide a promising scope. India is moving towards digital currency because of its economic efficiency and transparency, with faster settlements and lower transaction costs. If India successfully manages to formalise and include the proposal in the 2026 BRICS summit agenda, it will lead to a significant shift in global trade and transactions toward a multipolar, multi-currency financial world. The very attempt at a digital currency trade initiative clearly implies a movement against the dominance of the dollar. With the recent India-US trade agreements set to be officially formalised, BRICS financial initiatives that provoke the US may be handled sensibly and diplomatically.
Bio: Chris Teres Jos is an undergraduate student in the Department of International Relations, Peace and Public Policy (IRP and PP), St Joseph’s University, Bengaluru, Karnataka-560027, India. Beyond the classroom, she engages with policy debates, including participation in state-level seminars on the People’s Education Policy in Karnataka. Currently, contributing to the Global South Alliance (GSA) through a specialised project on AI in Urban Mobility. Her areas of interest include Human Security, systemic Challenges of Exploitation and Corruption in the Global South, International Organizations, Climate Change, and Refugee Crisis. Email: criztalkss@gmail.com
