BRICS: CBDCs at the Heart of a New Cross-Border Payment Project

Money transfers between countries remain a central topic for the BRICS. In Mumbai, the governor of the Reserve Bank of India, Sanjay Malhotra, indicated that several avenues are being explored to facilitate these operations. Among them is the connection of CBDCs and fast payment systems. However, discussions are still in their early stages. The main objective concerns reducing costs. This reflection comes as India also seeks to strengthen the international use of its national currency.

In Brief

• The BRICS are studying an interconnection between CBDCs and fast payment systems to facilitate cross-border transfers.
• The main goal is to reduce costs and simplify payments between member economies.
• India also aims to enhance the international use of the rupee and local currencies in exchanges.
• This interconnection also raises questions about privacy, transaction control, and the programmability of CBDCs.

The BRICS Explore Several Solutions for Payments

During an event in Mumbai, Sanjay Malhotra, governor of the Reserve Bank of India, explained that cross-border transfers regularly rank among the BRICS' priorities. According to him, several options are currently being examined, with no definitive decision yet made. The first avenue concerns Central Bank Digital Currencies (CBDCs), while another relies on the interconnection of fast payment systems. These two approaches aim to make transfers more transparent between participating economies.

The governor particularly emphasized the potential savings. Cross-border payments represent, according to him, an area where the BRICS could seek to reduce costs.

Cross-border payments are an area of interest for all of us, including the BRICS, as we believe there is considerable potential for cost reduction. Sanjay Malhotra, governor of the Reserve Bank of India. Source: Reuters.

A more direct connection between national infrastructures could limit some current steps. However, group officials have not yet finalized the model that would allow for this interconnection.

India Also Wants to Strengthen the Rupee

India is simultaneously pursuing efforts to internationalize the rupee and promote the use of local currencies. Sanjay Malhotra reiterated this direction during the event held in Mumbai. The country is hosting this year's BRICS summit, which brings together Brazil, Russia, India, China, and South Africa. The proposal to connect CBDCs had already been submitted by the RBI last January to be included on the agenda for the 2026 summit.

This initiative aligns with India's objectives regarding cross-border payments and trade. It could also give more room for national currencies in these exchanges. However, discussions remain preliminary, and no common architecture has yet been defined. The governor did not announce any timeline, leaving open questions related to technical standards, common rules, and future functioning together in the long term.

CBDCs: Reducing Costs While Raising Control Questions?

CBDCs correspond to the digital versions of official currencies issued directly by central banks. Their interconnection would create a channel for transfers between multiple countries. Payments could follow more direct circuits and reduce reliance on certain intermediaries. The system would seek to accelerate international operations.

Consumers and businesses could use these transfers through the national circuits they already know. For the BRICS, the challenge also lies in the ability to facilitate exchanges between local currencies. However, common adoption remains uncertain.

However, this centralized architecture raises questions about payment privacy. Competent institutions could have increased visibility over transactions and financial flows. Therefore, privacy protection is a point to consider in any interconnection.

The programmable nature of CBDCs adds another question to the debate. Authorities could then intervene more in the circulation of funds or condition certain uses. This possibility raises the question of the balance between institutional control, payment efficiency, and financial freedoms.

In the short term, members should clarify technical options and cooperation modalities. The next BRICS summit could continue discussions on cross-border payments, without prejudging their outcome. In the coming months, discussions will need to specify technical conditions and common rules. The BRICS summit could thus serve to examine this cooperation more concretely, while leaving open the question of its timeline and implementation.