**BRICS Aims for Cheaper Trade Payments to Reduce US Dollar Dependence Ahead of Summit**
As the BRICS group prepares for its upcoming summit in New Delhi, discussions are intensifying around developing mechanisms that would facilitate cheaper and faster trade among its member countries. The focus is on enhancing the use of national currencies and digital payment systems to streamline transactions and reduce reliance on the US dollar.
According to reports from TASS, discussions include exploring local-currency settlements and the implementation of platforms involving central bank digital currencies (CBDCs). These efforts aim to lower transaction costs in bilateral trade and foster investment within the BRICS bloc, which consists of Brazil, Russia, India, China, and South Africa.
The proposed payment mechanisms are intended to complement existing global payment systems rather than replace them. Officials have emphasized that these discussions are not targeting any specific country or group of countries, indicating a collaborative approach within the BRICS framework.
Indian Trade Minister Piyush Goyal has expressed support for trade settlements in national currencies, suggesting that a unified BRICS currency may not be necessary. This perspective aligns with the Reserve Bank of India (RBI), which has been proactive in advancing these discussions. RBI Governor Sanjay Malhotra highlighted the importance of cross-border payments and noted that there is significant potential for cost reduction in this area.
Malhotra pointed to India’s Unified Payments Interface (UPI) as a successful example of a fast and efficient domestic payment system. He proposed that BRICS countries consider linking their digital currencies and fast-payment systems to facilitate smoother transactions. The RBI is advocating for the integration of these systems during the upcoming summit.
Currently, BRICS members have established several robust domestic payment systems that could be interconnected. India’s UPI, RuPay, and Structured Financial Messaging System; China’s Cross-Border Interbank Payment System (CIPS) for yuan transactions; Russia’s System for Transfer of Financial Messages (SPFS) and Mir card network; and Brazil’s Pix instant-payment system are all potential candidates for integration.
Additionally, the BRICS Business Council has initiated a project known as BRICS Pay, which seeks to connect payment channels across member economies without the need to create a completely new financial infrastructure.
For India, this initiative aligns with its broader objective to internationalize the rupee. The RBI has already established arrangements to promote local-currency trade with countries such as the UAE, Mauritius, the Maldives, and Indonesia, although the volume of such trades remains modest.
As the BRICS summit approaches, the focus remains on practical solutions to enhance trade efficiency and investment cooperation among member nations. The ongoing discussions reflect a significant shift towards reducing transaction costs and fostering economic collaboration within the group, while also addressing the challenges posed by reliance on the US dollar in international trade.