The story so far: The New Delhi Declaration that came out of the recent BRICS Summit in the national capital resolved to increase trade between member-countries and payments in national currencies. Days before the summit, a report by the news agency Reuters quoted sources as saying that at the event, India would push to link central bank digital currencies (CBDCs) for cross-border payments across BRICS nations, despite political and technical hurdles that could limit progress. The proposal to link CBDCs would be part of the agenda for the leaders’ meeting, the sources said, though the limited adoption of digital currencies globally could complicate implementation, the report added. The proposal was, however, not part of the Declaration.

On the summit eve, Russia’s largest bank Sberbank said it saw major ‌opportunities for India-Russia bilateral trade settlements through CBDCs. At a media briefing in New Delhi, Sberbank chief executive officer Herman Gref said trade settlement in CBDCs was much ‌more efficient.

Multiple wars and U.S. weaponisation of the dollar through financial sanctions are making countries in the Global South think of bypassing the so-far universally accepted SWIFT system for inter-country payments. The attempts to do so have been patchy, but there is an increasingly felt need to have other options. Even on Thursday, the U.S. Senate empowered President Donald Trump to impose 100% tariffs on countries such as India and China that buy Russian oil or gas.

What are some of the alternatives to the Belgium-based SWIFT payment system?

Project mBridge is a group comprising the Bank of Thailand, the Central Bank of the United Arab Emirates, the Digital Currency Institute of the People’s Bank of China, the Hong Kong Monetary Authority, and the Saudi Central Bank.

The Cross-Border Interbank Payment System (CIPS), a Reuters report said, is backed by the People’s Bank of China. China launched the CIPS clearing and settlement services system in 2015 to internationalise yuan use. It allows global banks to clear cross-border yuan transactions directly onshore, instead of through clearing banks in offshore yuan hubs, the report said.

The System for Transfer of Financial Messages, or SPFS, was developed by Russia in 2014 to bypass Western sanctions. In 2022, Russian banks were cut off from SWIFT, and the SPFS was of help.

SEPAMA, Iran’s local interbank telecom system, has as many as 52 branches of Iranian banks and four unnamed foreign banks connect ing with 106 banks using the SPFS, the Central Bank of Iran said in 2023.

How are these systems faring?

The Bank for International Settlements (BIS), an international financial institution owned by central banks to foster international monetary and financial cooperation, exited Project mBridge on October 31, 2024, after hand-holding it since 2019, when the Hong Kong Monetary Authority and the Bank of Thailand launched the system. mBridge, a cross-bloc multi-CBDC platform with no Western bank, attained minimum viability status in 2024. It was envisaged for direct peer-to-peer CBDC settlement without going through correspondent banks. The project team developed a new blockchain — the mBridge Ledger — custom-built by central banks to serve as a specialised and flexible platform for implementation of multi-currency cross-border payments in CBDCs, the BIS website says.

The BIS’s exit came under a cloud, with media reports saying it was because mBridge could provide the basis for a BRICS initiative to circumvent sanctions on Russia. A May 2016 Forbes report said that by late 2025, mBridge was in practice “a renminbi-denominated wholesale settlement rail for trade between China and the Gulf, running outside the dollar correspondent system”.

The remnimbi’s inclusion in the basket of currencies making up the Special Drawing Right, an international reserve asset created by the International Monetary Fund, has increased the acceptance of CIPS, which currently has participants in more than 120 countries, including all BRICS members with the exception of India, said a November 2025 opinion piece in The Hindu by Biswajit Dhar, a trade economist and former Professor, Jawaharlal Nehru University.

A March 19, 2026 South China Morning Post report says CIPS processed 679.8 billion yuan ($98.7 billion) of transactions on average per day in 2025, just a fraction of the $1.9 trillion of domestic and international payments Chips settles each business day. “While the CIPS has gained ground — especially among China’s trading partners in Africa and Asia — it remains far smaller in scale than established global systems, such as the U.S.-based Clearing House Interbank Payments System (Chips),” the report said. Beijing now appears to be moving towards building CIPS into a global platform compliant with multi-currency settlements and other foreign payment channels, the report quoted a study led by Ju Jiandong, a chair professor at Tsinghua University’s PBC School of Finance.

The SPFS, formed as Russian entities were banned from SWIFT, has grown at a record pace in 2023, the Russian central bank said that year, as Moscow ramped up efforts to resolve financial shortcomings wrought by sanctions over the Ukraine war. Alla Bakina, director of the central bank’s national payment system department, said 50 new entities had joined Russia’s alternative system that year, taking the total number to 440, of which more than 100 are non-residents.

The SPFS has been linked with Iran’s SEPAM, and entities in the Russian network can connect with Iranian banks.

How do India-Russia trade settlements happen now?

Russia and India, the second-largest importer of Russian oil, have built a functioning payments infrastructure using roubles and rupees, which now account for 96% of ‌bilateral trade, Ivan Nosov, head of Sberbank in India, said. “There are no problems with settlements between Russia and India. I am ready to say that this is one of the most reliable and best-established mechanisms for Russia’s payments with other countries,” he said.

According to official data, 22 Russian banks, including ⁠Sberbank, Russia’s largest lender, which was tasked with developing the payments infrastructure, and 17 Indian banks are currently servicing bilateral trade, a Reuters report said.

Published – September 19, 2026 10:59 am IST

The story so far:

The 18th BRICS summit in New Delhi to be held in September, with India as the Chair, is expected to push for mechanisms to facilitate cross-border payments between members, including links between digital payment systems and central bank digital currencies (CBDCs), according to a report in The Hindu businessLine. Ahead of the summit, finance ministries’ and central bank representatives from BRICS countries met in Jaipur on August 12-13 to discuss financial cooperation, payments, and the wider use of national currencies in settling trade between members.

How do current cross-border payments work?

Sending money from one country to another requires a chain of transactions. Let’s say, an importer in Cape Town is buying passenger cars from an exporter in Chennai. The payment does not travel directly from the South African bank to the Indian one. It travels via a series of intermediaries called correspondent banks that hold accounts with each other. Since the South African bank does not hold an account with the Indian one (and vice versa), the payment is routed through a larger international bank that deals with both and is typically headquartered in London or New York. Because very few banks hold both rupees and rand, the payment involves converting rand to dollars and dollars to rupees where, in essence, the dollar acts like a vehicle currency, even though no American is involved in the trade.

What is SWIFT?

Now, apart from the money, there are also instructions that travel between the banks. This is handled by SWIFT (Society for Worldwide Interbank Financial Telecommunication), which is a Belgium-based cooperative and overseen by the National Bank of Belgium along with the G-10 central banks, including the U.S. Federal Reserve. SWIFT is a messaging network, like a secure post-office. It enables institutions to exchange payment instructions through it and settle amounts separately. It is used directly by more than 11,000 institutions in over 200 countries. Smaller banks reach it indirectly through larger banks that are part of the SWIFT network, which is why it has become crucial and hard to displace.

What are the costs involved in each step?

Every intermediary charges a fee and the currencies are converted twice (rand to dollar and dollar to rupees). So the foreign exchange margins are paid twice. A 2019 BRICS survey of cross-border payment systems, conducted by Brazil, found that Brazilian respondents reported foreign exchange margins of 2.5% with the figure rising to 8.5% for payments in Africa and, in some cases, as high as 20%.

While speed of transactions used to be a major issue, SWIFT claims that its SWIFT Global Payments Innovation has helped reduce transaction times significantly. Some structural delays remain even as the transaction chain has also become thinner. The Bank for International Settlements (BIS) found that active correspondent banking relationships fell by 20% between 2011 and 2018 with regional declines varying from 12% to 30% and Latin America being the worst affected. The reasons for this decline were largely commercial. Payment volumes kept growing during this period, even as they travelled through a smaller network.

Why does BRICS want to change this system?

For developing economies, though, payments in a handful of dominant currencies such as the U.S. dollar, the euro and the Japanese yen expose countries to the monetary policies of the countries that issue them. The 2024 BRICS report under Russia’s chairmanship argued that this part of the financial system is monopolised by a single institution, raising transaction costs. Alternatives to the system suffer from the fact that they have to convince a large number of banks and regulators to join before being useful. A bank that uses an alternative system to deal with sanctioned entities — several Russian banks were cut off from SWIFT in 2022, following Russia’s invasion of Ukraine — also risks sanctions, which deters others from joining. A sanctions-hit Russia has pushed hardest for an alternative and is also the reason why others are wary of joining one.

What changes can be envisaged in the BRICS discussions?

The idea being explored is a payment system where, instead of payments moving through several correspondent banks with dollar conversions, national payment systems would connect to each other directly. This could be done in pairs as India and Singapore have already done for remittances by linking the former’s Unified Payments Interface (UPI) and the latter’s PayNow systems. But building bilateral systems individually will not scale appropriately.

An alternative could be via a shared hub that each country joins. One such effort is Project Nexus, designed by the BIS and handed over to a company set up by six central banks, including India’s Reserve Bank of India. It is set to go live only in 2027. Notably, it is not a BRICS initiative.

The BRICS discussions would extend this idea to the use of central bank digital currencies. Here, central banks issue digital versions of their currencies for use between banks — a settlement asset, not the retail digital rupee held by individuals — and exchange them on a common platform. Both legs of a currency swap would occur at the same instant or not at all, removing the risk of paying out before the other side pays, which speeds up settlement and reduces the capital banks must set aside against such transactions.

The 2024 BRICS report claims transactions settled this way would yield significant cost savings. Only one such platform runs today – mBridge, built by the BIS with the central banks of China, Thailand, Hong Kong, and the UAE, which the BIS handed to its participants and left in October 2024. Over 95% of its settlement volume is in China’s digital yuan, according to People’s Bank of China figures reported by Reuters.

The Kazan declaration of BRICS in 2024 agreed to “discuss and study the feasibility” of an independent settlement system called BRICS Clear, but the Rio declaration the following year did not mention it.

What is India’s position?

India’s own proposal, reported in January, is that members link their CBDCs for trade and tourism payments. Indian officials have been careful to frame the payment systems as a means of cutting transaction costs and speeding up settlement rather than as initiatives to displace the dollar — even as Russian proposals, and those of some Brazilian economists, have gone further, towards alternative financial systems that would reduce dependence on the dollar.

U.S. President Donald Trump, in November 2024, had threatened to impose 100% tariffs on BRICS countries if they moved away from the dollar and a further 10% tariff on countries aligning with vaguely defined “anti-American” BRICS policies during last year’s Rio summit. The threats were not carried out. But even though they were not targeted at payment systems, this could perhaps be a reason why Indian officials have framed discussions only as a matter of reducing transaction costs.

Published – September 06, 2026 02:16 am IST