India promotes a plan for interconnection of central bank digital currencies among Russia, Brazil, China, and South Africa as part of BRICS

The Reserve Bank of India (RBI) is actively pushing an ambitious project to create an interconnected system of central bank digital currencies (CBDCs) among the main BRICS members. Led by India, which is set to preside over the BRICS 2026 summit, this initiative aims to revolutionize cross-border trade flows within the bloc comprising Russia, Brazil, China, South Africa, and new members such as the United Arab Emirates, Iran, and Indonesia.

An infrastructure to reduce dependence on the US dollar

The proposed architecture would primarily aim to facilitate trade and tourism among the five main BRICS powers, while gradually limiting the dominance of the US dollar in international transactions. According to sources informing Reuters, the RBI has urged the Indian government to include this CBDC linkage proposal on the agenda of the upcoming summit hosted by India. The project would target direct connectivity between digital payment systems controlled by the central banks of Russia, Brazil, China, and South Africa, thus representing the first formalized attempt of this kind.

Challenges posed by American resistance

This initiative comes amid rising trade tensions between Washington and India. The US government, under Donald Trump’s presidency, imposed 50% tariffs on Indian imports, including 25% specifically on Russian crude oil. These measures have significantly impacted Indian exporters in sectors such as textiles, gemstones, and chemicals.

Trump has also issued multiple public warnings to BRICS nations, threatening sanctions in the form of tariffs reaching 100% if attempts are made to replace the US dollar. These tensions have also weakened bilateral trade negotiations between the US and India, which remain at a standstill despite several attempts to revive them, including a scheduled discussion in early January that yielded no concrete results.

Current state of central bank digital currencies

Although no major BRICS member has fully deployed its CBDC nationwide, all have launched significant pilot programs. India’s e-rupee, introduced in December 2022, has attracted around 7 million retail users thanks to RBI incentives, including offline payments and wallets developed with fintech partners. China, for its part, has undertaken efforts to expand its digital yuan globally and is considering incentive mechanisms for holders of this currency.

Brazil, Russia, and South Africa are also progressing on their respective projects, reflecting a shared desire within BRICS to explore alternatives to Western-dominated payment systems. These technological advances create a window of opportunity for the interconnection proposed by India.

Market outlook and geopolitical implications

This strategic convergence of BRICS around central bank digital currencies would redraw balances in international trade and could accelerate the gradual de-dollarization of certain regional trade flows. However, the success of such an architecture will heavily depend on the ability of the five powers to overcome bilateral differences and align their regulatory frameworks to ensure CBDC interoperability.

In cryptocurrency markets, Bitcoin is currently trading around $87,910, reflecting current geopolitical uncertainties. Institutional developments around BRICS CBDCs could have lasting implications on the structure of digital assets and global payment systems in the coming years.