Context

Ahead of the 18th BRICS Summit in New Delhi under India's chairmanship (2026), BRICS finance ministries and central banks met in Jaipur to discuss financial cooperation, local-currency trade settlements and alternative cross-border payment systems. Chinese proposals, including the five-point 'POWER' framework, have brought the bloc's Global South agenda into focus.

The BRICS 'POWER' Framework

  • P – Principle: Uphold the UN Charter — sovereign equality, non-interference, peaceful dispute settlement, rejection of hegemonism.
  • O – Openness: Open world economy centred on the WTO multilateral trading system; safeguard MFN treatment; oppose tariff barriers and supply-chain decoupling; cooperation in minerals, energy, infrastructure.
  • W – Win-Win: Align with UN SDGs and post-2030 development planning; macroeconomic coordination, trade facilitation, cross-border payment mechanisms, food and energy security.
  • E – Engine: Leverage BRICS scale — nearly half the world's population, ~30% of global GDP, 20% of global trade; growth projected to outpace the G-7 threefold by 2028; digital economy and AI cooperation.
  • R – Responsibility: Act as a stabilising anchor for multipolarity; consecutive presidencies of India (2026) and China (2027); India-China bilateral progress (resumed direct flights, border trade).

Why Alternative Cross-Border Payments?

Problems with Conventional Systems

  • Correspondent banking dependence: payments routed via intermediary banks in financial hubs raise costs and time.
  • Dollar dependence: double conversion through USD exposes economies to US monetary policy.
  • High transaction costs: can reach 8–20% in some developing-country corridors.
  • SWIFT dependence: vulnerability to sanctions (e.g., exclusion of Russian banks from SWIFT in 2022).
  • Shrinking correspondent banking: global relationships fell ~20% between 2011–2018.

BRICS Alternatives

  • Local-currency settlements and multi-CBDC platforms like mBridge (central banks of China, Thailand, Hong Kong, UAE) — lower fees, benefits exporters and MSMEs.
  • Wholesale CBDCs enable simultaneous Payment-versus-Payment (PvP) settlement, reducing risk and time; RBI has proposed linking CBDCs across BRICS.
  • BRICS Clear (referenced at 2024 Kazan Summit): independent clearing and settlement system for financial autonomy.
  • Fast-payment linkages (e.g., UPI integration) for real-time remittances and tourism payments.

Challenges

  • Geopolitical divergence: Russia pushes de-dollarisation; India prioritises cost-efficiency and technical integration; US threatens higher tariffs on BRICS over dollar alternatives.
  • Secondary sanctions risk for institutions joining SWIFT alternatives alongside sanctioned nations.
  • Yuan dominance: over 95% of mBridge settlement volume is in China's digital yuan.
  • Scalability constraints: bilateral UPI-type links hard to replicate multilaterally.
  • Infrastructure and cost: zero-fee models hard to sustain at scale; cybersecurity investment needed.
  • Regulatory fragmentation: divergent capital controls, data localisation, AML/CFT standards.
  • Cyber and stability risks: cyberattack targets; frictionless transfers may trigger capital flight and currency volatility.

Way Forward

  • Shared hub architectures like BIS-designed Project Nexus linking domestic instant payment systems.
  • Strengthen sovereign CBDCs (India's e-Rupee) as base architecture.
  • Opt-in, pilot-based, corridor-specific rollout (trade invoicing, tourism first).
  • Harmonise compliance with FATF standards while respecting regulatory sovereignty.
  • Maintain multilateral interoperability with IMF, BIS Innovation Hub and SWIFT to avoid bifurcation of global finance.

Conclusion

BRICS payment alternatives are driven by lower costs and by protecting the Global South from Western financial weaponisation. However, escaping dollar dependence must not create fragmented or China-dominated systems — true strategic autonomy requires neutral, interoperable and secure digital payment infrastructure.