{"id":72057,"date":"2025-11-05T11:24:52","date_gmt":"2025-11-05T05:54:52","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=72057"},"modified":"2025-11-06T11:52:24","modified_gmt":"2025-11-06T06:22:24","slug":"brics-pay","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/brics-pay\/","title":{"rendered":"BRICS Pay &#8211; Redefining Global Financial Architecture"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><strong>BRICS Pay Latest News<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">BRICS nations are advancing plans to operationalise BRICS Pay, a cross-border payment system aimed at reducing dependence on the U.S.-controlled SWIFT network and promoting financial sovereignty among member countries.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Introduction<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/brics\/\" target=\"_blank\">BRICS<\/a><\/strong><span style=\"font-weight: 400;\"> grouping, comprising Brazil, Russia, India, China, and South Africa, has embarked on an ambitious mission to challenge the global financial dominance of the U.S.-led SWIFT system.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The recent unveiling of the BRICS Cross-Border Payments Initiative, or \u201cBRICS Pay,\u201d marks a decisive step in their long-standing quest to establish a more inclusive, multipolar financial order.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This effort aims to promote local currency settlements, protect member nations from Western sanctions, and strengthen the group\u2019s financial sovereignty.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The motivation behind this move has intensified since Russia faced sweeping Western sanctions in 2014 and 2022, leading the bloc to pursue alternative transaction mechanisms insulated from U.S. influence.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Evolution of BRICS Financial Cooperation<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The journey towards financial independence for BRICS began at the <\/span><b>Fortaleza Summit (2014)<\/b><span style=\"font-weight: 400;\">, where member nations established the <\/span><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/new-development-bank-ndb\/\" target=\"_blank\"><b>New Development Bank<\/b><\/a><b> (NDB)<\/b><span style=\"font-weight: 400;\"> and the <\/span><b>Contingent Reserve Arrangement (CRA)<\/b><span style=\"font-weight: 400;\">, the first financial institutions created by developing nations to rival Western-dominated entities like the IMF and World Bank.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In 2015, after the U.S. and EU imposed sanctions on Russia following the annexation of Crimea, BRICS members intensified discussions on using local currencies for trade and investment.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">By 2017, the grouping had agreed to strengthen <\/span><b>currency cooperation<\/b><span style=\"font-weight: 400;\"> through swap arrangements and local currency settlements.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This groundwork culminated in the <\/span><b>Kazan Summit (2024)<\/b><span style=\"font-weight: 400;\">, where the leaders launched the <\/span><b>BRICS Cross-Border Payments Initiative<\/b><span style=\"font-weight: 400;\">, BRICS Pay, and underscored the importance of \u201cstrengthening correspondent banking networks within BRICS and enabling settlements in local currencies.\u201d<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>The BRICS Pay Initiative<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">BRICS Pay represents the grouping\u2019s most concrete step to reduce reliance on the <\/span><b>SWIFT network<\/b><span style=\"font-weight: 400;\">, a Belgium-based system used by over 11,000 banks for global money transfers.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">SWIFT\u2019s control by G-10 central banks, especially under U.S. influence, has long been criticised for allowing the weaponisation of the global financial system through sanctions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The prototype of BRICS Pay was demonstrated in Moscow in <\/span><b>October 2024<\/b><span style=\"font-weight: 400;\">, marking a milestone in the bloc\u2019s efforts to build an independent payment ecosystem.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The project is being developed by the <\/span><b>BRICS Payment Task Force (BPTF)<\/b><span style=\"font-weight: 400;\">, which aims to ensure interoperability between national payment systems.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Each BRICS nation already possesses a robust digital payment infrastructure:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>India<\/b><span style=\"font-weight: 400;\"> &#8211; Unified Payments Interface (UPI)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>China<\/b><span style=\"font-weight: 400;\"> &#8211; Cross-Border Interbank Payment System (CIPS)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Russia<\/b><span style=\"font-weight: 400;\"> &#8211; System for Transfer of Financial Messages (SPFS)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Brazil<\/b><span style=\"font-weight: 400;\"> &#8211; Pix Instant Payment System<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>South Africa<\/b><span style=\"font-weight: 400;\"> &#8211; South African Multiple Option Settlement (SAMOS)<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Together, these systems form the technological backbone of BRICS Pay, offering a credible alternative to SWIFT within the bloc and potentially to other developing economies.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Strategic Motivation and Political Context<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The desire to establish BRICS Pay stems from three key motivations:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Financial Sovereignty:<\/b><span style=\"font-weight: 400;\"> Reducing dependency on the U.S. dollar and mitigating exposure to Western sanctions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Economic Efficiency:<\/b><span style=\"font-weight: 400;\"> Lowering transaction costs and settlement times for trade among member nations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Geopolitical Assertion:<\/b><span style=\"font-weight: 400;\"> Establishing the BRICS bloc as a counterweight to Western economic dominance.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The inclusion of <\/span><b>Iran<\/b><span style=\"font-weight: 400;\">, a nation long targeted by Western sanctions, in BRICS in 2024 further emphasised the grouping\u2019s goal of building a sanctions-proof global payments system.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, this initiative has drawn strong reactions.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Former U.S. President Donald Trump threatened <\/span><b>100% tariffs<\/b><span style=\"font-weight: 400;\"> on BRICS members if they attempted to \u201ccreate a new currency or back any other currency to replace the mighty U.S. dollar,\u201d underscoring the geopolitical sensitivity of the move.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Challenges in Implementing BRICS Pay<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Despite its promise, BRICS Pay faces multiple hurdles:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Divergent National Interests:<\/b><span style=\"font-weight: 400;\"> Each member is promoting its own payment system globally. For instance, India\u2019s UPI is expanding into Asia and Africa, while China\u2019s CIPS operates in over 120 countries. Aligning these platforms under one interoperable framework remains a major challenge.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Technical Interoperability:<\/b><span style=\"font-weight: 400;\"> Integrating five distinct digital payment ecosystems requires harmonised regulatory and security standards.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Currency Coordination:<\/b><span style=\"font-weight: 400;\"> The absence of a unified BRICS currency limits the system\u2019s potential to function seamlessly.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Trust Deficit:<\/b><span style=\"font-weight: 400;\"> Smaller BRICS members may fear Chinese dominance, given the internationalisation of the yuan and its inclusion in the IMF\u2019s Special Drawing Rights (SDR) basket.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Moreover, the creation of a common BRICS currency remains distant.\u00a0<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Global Implications<\/strong><\/h2>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If successful, BRICS Pay could fundamentally alter the <\/span><b>global financial landscape<\/b><span style=\"font-weight: 400;\">. It would provide developing nations with an alternative to SWIFT, fostering <\/span><b>multipolarity in global finance<\/b><span style=\"font-weight: 400;\"> and reducing the dollar\u2019s overwhelming dominance.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Experts suggest that even a <\/span><b>regionalised adoption<\/b><span style=\"font-weight: 400;\">, covering intra-BRICS trade and transactions, would signal a significant geopolitical shift.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The growing popularity of <\/span><b>local currency settlements<\/b><span style=\"font-weight: 400;\">, especially in energy trade between India, Russia, and China, aligns with this vision.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, the initiative\u2019s success depends on sustained political will, technical integration, and trust among the members, factors that will determine whether BRICS Pay becomes a global disruptor or remains a regional experiment.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <a href=\"https:\/\/www.thehindu.com\/news\/international\/how-brics-is-challenging-swift-explained\/article70241519.ece\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">TH<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The BRICS nations are accelerating efforts to build BRICS Pay aimed at reducing dependence on the SWIFT network.<\/p>\n","protected":false},"author":21,"featured_media":72067,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[3556,60,22,59],"class_list":{"0":"post-72057","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-brics-pay","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/72057","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\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=72057"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/72057\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/72067"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=72057"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=72057"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=72057"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}