India's central bank proposes linking BRICS' digital currencies

Mumbai/ Delhi: India's central bank has proposed that BRICS countries link their official digital currencies to make cross-border trade and tourism payments easier, two sources said, which could reduce reliance on the U.S. dollar ​as geopolitical tensions rise.

The Reserve Bank of India (RBI) has recommended to the government that a proposal connecting the central bank digital currencies (CBDCs) be included on the agenda ‌for the 2026 BRICS summit, the sources said. They requested anonymity because they were not authorised to speak publicly.

India will ⁠host the summit, which will be held later this year. ‌If the recommendation is accepted, a proposal to link the digital currencies of BRICS members would be put forward for the first time. The BRICS organisation includes Brazil, Russia, India, China and South Africa, among others.

The initiative could irritate the U.S., which has warned against any moves to bypass the dollar.

U.S. President Donald Trump has previously said the BRICS alliance is "anti-American" and he threatened to impose tariffs on its members.

The RBI, India's central government and the central banks of Brazil and Russia did not respond to emails seeking comment. The People's Bank of ​China said it had no information to share on the subject in response to a Reuters request for comment; the South African central bank declined to comment.

The RBI's proposal to link BRICS' CBDCs for cross-border trade finance and tourism has not been previously reported.

Building bridges

The RBI's proposal builds on a 2025 declaration at a BRICS summit in Rio de Janeiro, which pushed for interoperability between members' payment systems to make cross-border transactions more ‌efficient.

The RBI has publicly ‌expressed interest in linking India's digital rupee with other nations' CBDCs to expedite cross-border transactions and bolster its currency's global usage. It has, however, said its efforts to promote the rupee's global use are not aimed at promoting de-dollarisation.

While none of ⁠the BRICS members have fully launched their digital currencies, all five main members have been running pilot projects.

India's digital currency - called the e-rupee - has attracted a total of 7 million retail users since its launch in December 2022, while China has pledged to boost the international use of the digital yuan.

The RBI has encouraged the adoption of the e-rupee by enabling offline payments, providing programmability for government subsidy transfers and by ⁠allowing fintech firms to offer digital currency wallets.

For the BRICS digital currency linkages to be successful, elements like interoperable technology, governance rules ⁠and ways to settle imbalanced trade volumes would be among the discussion topics, one of the sources said.

The source cautioned that ‌hesitation among members to adopt technological platforms from other countries could delay work on the proposal and concrete progress would require consensus on tech and ‌regulation.

One idea that is being explored to manage potential trade imbalances is the use of bilateral foreign exchange swap arrangements between central banks, both the sources said.

Previous attempts by Russia and India to conduct more trade in their local currencies hit roadblocks. Russia accumulated large balances of the Indian rupee for which it found limited use, prompting India's central bank ‍to permit the investment of such balances in local bonds.

Weekly or monthly settlements for transactions are being proposed to be made via the swaps, the second source said.

Long road

Founded in 2009 by Brazil, Russia, India and China, BRICS later expanded to include South Africa and has since broadened further, adding newer members like the United Arab Emirates, Iran and Indonesia.

The bloc has returned to the limelight thanks to Trump’s revived trade-war rhetoric and tariff threats, including warnings aimed at countries aligning with BRICS. At the same time, India has edged closer to Russia and China as it faced trade friction with the U.S.

Past efforts to turn BRICS into a major economic counterweight have run into hurdles, including an ambition to create a common BRICS currency, an idea that was floated by Brazil but was subsequently nixed.

While interest in CBDCs has been dampened globally by rising stablecoin adoption, India continues to position its e-rupee as a safer, more regulated ​alternative.

CBDCs "do not pose many of the risks associated with stablecoins," ‌RBI Deputy Governor T Rabi Sankar said last month.

"Beyond the facilitation of illicit payments and circumvention of control measures, stablecoins raise significant concerns for monetary stability, fiscal policy, banking intermediation and systemic resilience," Sankar said.

India fears widespread stablecoin use could fragment national payments and weaken its digital payments ecosystem, Reuters reported in September.