{"id":123067,"date":"2026-09-06T10:32:53","date_gmt":"2026-09-06T05:02:53","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=123067"},"modified":"2026-09-06T12:38:39","modified_gmt":"2026-09-06T07:08:39","slug":"brics-cross-border-payments","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/brics-cross-border-payments\/","title":{"rendered":"BRICS Cross-Border Payments: India\u2019s Push for Faster and Cheaper Transactions"},"content":{"rendered":"<h2><b>BRICS Cross-Border Payments Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ahead of the 18th BRICS Summit in New Delhi (September 2026), with India as Chair, member nations are pushing for new mechanisms to make cross-border payments faster and cheaper \u2014 including linking digital payment systems and central bank digital currencies (CBDCs).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Finance ministries and central bank representatives from BRICS countries met in Jaipur recently to discuss this financial cooperation<\/span><\/li>\n<\/ul>\n<h2><b>How Do Cross-Border Payments Currently Work?<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Sending money internationally isn&#8217;t a direct transfer \u2014 it travels through a chain of intermediaries called <\/span><b>correspondent banks<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For example, if a South African importer pays an Indian exporter, the payment doesn&#8217;t move directly between the two countries&#8217; banks.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Instead, it&#8217;s routed through a <\/span><b>larger international bank<\/b><span style=\"font-weight: 400;\"> (usually based in London or New York) that holds accounts with both.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Since very few banks hold both rupees and rand directly, the payment gets converted rand \u2192 <\/span><b>dollar<\/b><span style=\"font-weight: 400;\"> \u2192 rupee, with the US dollar acting as a &#8220;vehicle currency&#8221; \u2014 even though no American party is involved in the trade at all.<\/span><\/li>\n<\/ul>\n<h2><b>The Role of SWIFT<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Alongside the actual money, <\/span><b>payment instructions<\/b><span style=\"font-weight: 400;\"> also need to travel between banks \u2014 this is handled by SWIFT (Society for Worldwide Interbank Financial Telecommunication).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">SWIFT is a Belgium-based cooperative overseen by the National Bank of Belgium and G-10 central banks (including the US Federal Reserve).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">SWIFT works like a secure messaging network \u2014 a &#8220;post office&#8221; for payment instructions \u2014 used directly by over 11,000 institutions in more than 200 countries.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Smaller banks connect to it indirectly through larger ones, making SWIFT deeply embedded and hard to replace.<\/span><\/li>\n<\/ul>\n<h2><b>Why Are These Payments So Costly and Slow?<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Every intermediary bank in the chain <\/span><b>charges a fee<\/b><span style=\"font-weight: 400;\">, and currency is converted twice, meaning forex margins are paid twice over.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A 2019 BRICS survey by Brazil found:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Forex margins of 2.5% for Brazilian respondents generally<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Rising to 8.5% for payments involving Africa<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Sometimes as high as 20% in certain cases<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While SWIFT&#8217;s &#8220;<\/span><b>Global Payments Innovation<\/b><span style=\"font-weight: 400;\">&#8221; has helped speed up transactions, structural delays persist.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Bank for International Settlements (BIS) found that active correspondent banking relationships fell by 20% between 2011 and 2018 \u2014 with Latin America worst affected (declines up to 30%) \u2014 even as overall payment volumes kept growing through this shrinking network.<\/span><\/li>\n<\/ul>\n<h2><b>Why Does BRICS Want to Change This System?<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For developing economies, heavy reliance on a <\/span><b>few dominant currencies<\/b><span style=\"font-weight: 400;\"> \u2014 the US dollar, euro, and yen \u2014 creates exposure to the monetary policies of the countries issuing them.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The 2024 BRICS report (under Russia&#8217;s chairmanship) argued that this system is <\/span><b>effectively monopolised<\/b><span style=\"font-weight: 400;\">, driving up transaction costs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Building alternatives is hard, though \u2014 they require convincing a large number of banks and regulators to join.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">There&#8217;s also a <\/span><b>sanctions risk<\/b><span style=\"font-weight: 400;\">: several Russian banks were cut off from SWIFT in 2022 after Russia&#8217;s invasion of Ukraine, making other countries cautious about joining any alternative system that a sanctioned nation might use.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This is exactly why Russia has pushed hardest for alternatives, while others remain wary.<\/span><\/li>\n<\/ul>\n<h2><b>What Alternatives Are Being Explored?<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Direct linking of national payment systems<\/b><span style=\"font-weight: 400;\"> \u2014 instead of routing through multiple correspondent banks, countries could connect their payment systems directly, in pairs.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">India has already done this with Singapore, linking <\/span><b>UPI<\/b><span style=\"font-weight: 400;\"> with Singapore&#8217;s <\/span><b>PayNow<\/b><span style=\"font-weight: 400;\"> for remittances. However, building such bilateral links one at a time doesn&#8217;t scale well.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>A shared hub model<\/b><span style=\"font-weight: 400;\"> \u2014 <\/span><b>Project Nexus<\/b><span style=\"font-weight: 400;\">, designed by the BIS and now run by a company set up by six central banks (including India&#8217;s RBI), aims to connect multiple countries&#8217; payment systems through one common hub.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It&#8217;s expected to go live only in <\/span><b>2027<\/b><span style=\"font-weight: 400;\">, and importantly, <\/span><b>it is not a BRICS initiative<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Central Bank Digital Currencies (CBDCs)<\/b><span style=\"font-weight: 400;\"> \u2014 BRICS discussions extend this idea further, exploring the use of CBDCs (digital versions of currencies used for bank-to-bank settlement, not retail digital currency for individuals) exchanged on a common platform.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Both sides of a currency swap would settle <\/span><b>simultaneously<\/b><span style=\"font-weight: 400;\">, eliminating the risk of one party paying before the other, speeding up settlement and reducing capital banks need to set aside.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The only such platform running today is <\/span><b>mBridge<\/b><span style=\"font-weight: 400;\">, built by BIS with the central banks of <\/span><b>China, Thailand, Hong Kong, and the UAE<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">BIS handed it over to participants in October 2024. Notably, <\/span><b>over 95% <\/b><span style=\"font-weight: 400;\">of mBridge&#8217;s<\/span> <span style=\"font-weight: 400;\">settlement volume<\/span> <span style=\"font-weight: 400;\">is in<\/span><b> China&#8217;s digital yuan<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>2024 Kazan Declaration<\/b><span style=\"font-weight: 400;\"> agreed to &#8220;discuss and study the feasibility&#8221; of an independent BRICS settlement system called <\/span><b>BRICS Clear<\/b><span style=\"font-weight: 400;\"> \u2014 but this proposal was <\/span><b>notably absent<\/b><span style=\"font-weight: 400;\"> from the following year&#8217;s Rio Declaration.<\/span><\/li>\n<\/ul>\n<h2><b>What Is India&#8217;s Position?<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India&#8217;s own proposal, reported in January, suggests member nations link their CBDCs specifically for trade and tourism payments.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Indian officials have been careful to frame this purely as a way to cut transaction costs and speed up settlements \u2014 <\/span><b>not as an attempt to displace the US dollar<\/b><span style=\"font-weight: 400;\">, unlike some Russian and Brazilian proposals that go further toward reducing dollar dependence.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This cautious framing may not be accidental. In November 2024, then US President Donald Trump threatened 100% tariffs on BRICS countries if they moved away from the dollar, plus a further 10% tariff on countries aligning with vaguely defined &#8220;anti-American&#8221; BRICS policies.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Though these threats weren&#8217;t carried out, they may explain why India has stuck to a narrower, cost-focused framing of the payment discussions.<\/span><\/li>\n<\/ul>\n<h2><b>Conclusion<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">BRICS&#8217;s push for alternative cross-border payment mechanisms reflects developing economies&#8217; shared concern over high costs and dollar dependence in global finance, though the group remains divided on how far to go \u2014 with Russia favouring dollar alternatives and India framing its proposals purely around efficiency.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As India hosts the 2026 summit, its cautious, cost-centric approach to CBDC linkages will likely shape how far BRICS&#8217;s payment ambitions actually progress.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/www.thehindu.com\/news\/international\/why-is-brics-exploring-cross-border-payments-explained\/article71433307.ece\" target=\"_blank\" rel=\"nofollow noopener\">TH<\/a> | <a href=\"https:\/\/www.firstpost.com\/world\/will-brics-discuss-a-common-currency-or-alternative-to-the-us-dollar-14042707.html\" target=\"_blank\" rel=\"nofollow noopener\">FP<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>BRICS cross-border payments aim for faster, cheaper transactions through payment links and CBDCs, with India focusing on efficiency.<\/p>\n","protected":false},"author":18,"featured_media":123103,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[10052,60,22,59],"class_list":["post-123067","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-brics-cross-border-payments","tag-mains-articles","tag-upsc-current-affairs","tag-upsc-mains-current-affairs","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/123067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=123067"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/123067\/revisions"}],"predecessor-version":[{"id":123102,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/123067\/revisions\/123102"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/123103"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=123067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=123067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=123067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}