India is joining a growing number of countries seeking to reduce their reliance on the U.S. dollar, a move influenced by President Donald Trump's assertive trade policies.
Reserve Bank of India's CBDC Proposal for BRICS
The Reserve Bank of India (RBI) has put forward a proposal to link the digital currencies of BRICS alliance member states, aiming to facilitate cross-border payments. This initiative was suggested for formal inclusion at the 2026 BRICS summit, which India is set to host.
The BRICS group currently comprises Brazil, Russia, India, China, South Africa, the United Arab Emirates, Iran, and Indonesia. The proposed linkage of Central Bank Digital Currencies (CBDCs) is intended to simplify cross-border trade and tourism payments.
Currently, international trade transactions are predominantly settled using the U.S. dollar, often necessitating the use of Western-dominated systems such as SWIFT. By connecting their CBDCs, BRICS nations could enable direct settlement of trades among themselves.
This latest RBI proposal builds upon an agreement reached in Rio de Janeiro in 2025, which focused on enhancing the interoperability of payment systems.
Although no BRICS member has fully launched a public CBDC, all five original members are actively engaged in advanced pilot programs. India's "e-rupee" initiative, for instance, has already registered 7 million retail users. China has also been a strong proponent of increasing the international use of its digital yuan.
For the successful implementation of linked CBDCs, the participating countries will need to establish consensus on interoperable technology and governance frameworks.
To address trade imbalances, such as instances where countries like Russia have accumulated significant surpluses of Indian rupees that are difficult to spend, the RBI is exploring bilateral foreign exchange swap arrangements. These arrangements would permit central banks to exchange currencies at predetermined rates to settle debts on a weekly or monthly basis.
Reasons Behind the BRICS Alliance's Shift from the U.S. Dollar
Recent statements by U.S. President Donald Trump, who has characterized the BRICS alliance as "anti-American" and threatened substantial tariffs on nations attempting to move away from dollar dominance, have contributed to trade friction between the U.S. and several BRICS members, including India.
The RBI has clarified that its efforts to promote the rupee are not an attempt to be "anti-dollar" but rather a measure to safeguard India's own economic interests. In recent times, India has fostered closer trade relationships with Russia and China to mitigate the impact of U.S. trade disputes.
RBI Deputy Governor T. Rabi Sankar has previously highlighted the risks posed by stablecoins to monetary stability and banking intermediation. Consequently, India is actively promoting its state-backed digital rupee as an alternative to encourage citizens to use it for daily payments, thereby discouraging the use of dollar-pegged stablecoins.
The expansion of the BRICS alliance to include significant oil-producing nations like the UAE and Iran, along with a major economy like Indonesia, has amplified the bloc's capacity to develop its own financial infrastructure. Reports from late 2025 indicated the technical feasibility of a multi-CBDC platform involving China and the UAE, known as the "mBridge" project.