India is working to link central bank digital currencies (CBDCs) among BRICS nations for cross-border payments at an upcoming summit, despite political and technical challenges. The BRICS leaders will meet in New Delhi on September 12 and 13. The Reserve Bank of India proposed this idea earlier to promote cross-border trade.
The BRICS group consists of Brazil, Russia, India, China, South Africa, and several others like Egypt and the UAE. The CBDC linking initiative will be discussed at the leaders’ meeting, although the global slow adoption of digital currencies could make it difficult to implement. Previous efforts to create shared payment mechanisms within BRICS have seen limited success, highlighting challenges in integrating diverse financial systems. Strained relations between member nations, like Iran and the UAE, could hinder progress. Additionally, India is cautious about deepening financial ties with China due to national security concerns.
Currency-swap agreements may also be necessary to manage trade imbalances before any CBDC linkage can happen. While BRICS nations have considered alternatives to dollar-based payments, India aims to simplify cross-border transactions without intending to replace the dollar.
With information from Reuters
