Reserve Bank of India's Initiative
The Reserve Bank of India (RBI) is urging the government to place a proposal that would link BRICS nations' central bank digital currencies (CBDCs) on the agenda for the 2026 summit it will host. The proposed system aims to ease cross-border trade and tourism among BRICS members while gradually reducing reliance on the U.S. dollar in international transactions.
Sources told Reuters the RBI pushed the government to add the proposal for creating an interconnected system of CBDCs to the summit agenda later this year. This would mark the first formal attempt to establish a digital currency link among BRICS members including Brazil, Russia, India, China, South Africa, and newer partners like the UAE, Iran, and Indonesia.
Context of U.S.-India Trade Tensions
The initiative comes amid escalating U.S.-India trade tensions under President Trump, whose tariffs and warnings against dollar alternatives have strained negotiations and hurt Indian exporters. Trump has repeatedly warned BRICS nations against replacing the dollar, threatening to penalize such attempts with 100% tariffs on countries pursuing alternative settlement systems.
Trade talks between the U.S. and India nearly concluded in the middle of last year but collapsed after Indian Prime Minister Narendra Modi delayed a call with Trump, which was perceived as a diplomatic snub. Negotiations remain stalled even after a planned Jan. 13 discussion produced no progress, damaging profits for Indian exporters in textiles, gems, and chemicals.
Trump's 50% tariffs on Indian imports, including 25% specifically for importing Russian crude oil, triggered a decline in Indian shipments to the U.S. The trade standoff has accelerated Indian interest in alternative payment systems that reduce exposure to dollar-denominated transactions and U.S. financial infrastructure.
Progress and Pilot Programs for CBDCs
While no BRICS member has fully rolled out its CBDC, all core nations have been running pilot programs. India's e-rupee, introduced in December 2022, has drawn 7 million retail users according to official figures, with the central bank boosting adoption through offline payments, programmable subsidies, and fintech wallet integrations.
China has vowed to expand the digital yuan globally and reportedly allows commercial banks to pay interest on digital yuan holdings. The country's CBDC development represents one of the most advanced programs globally, with extensive domestic testing and international pilot projects exploring cross-border payment applications.
BRICS Stance on Dollar Dominance
The proposal to link BRICS digital currencies could spark tensions with Washington as it seeks to defend the dollar's role as the global reserve currency. However, officials from BRICS member states have repeatedly stated the bloc is not attempting to replace the dollar or launch a rival reserve currency, focusing instead on mutual investment and economic coordination.
Russia's Kremlin spokesperson Dmitry Peskov stated in January 2025 that BRICS was not seeking a dollar alternative and was not planning a common currency. Brazil's central bank similarly downplayed the idea in May, stating BRICS could not create assets rivaling U.S. dollar dominance, even as technical discussions around payment system interoperability continue among member nations.