{"id":84197,"date":"2026-01-25T11:17:18","date_gmt":"2026-01-25T05:47:18","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=84197"},"modified":"2026-01-27T11:41:40","modified_gmt":"2026-01-27T06:11:40","slug":"rbi-nudges-india-on-brics-digital-currency-linkage-for-cross-border-payments","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/rbi-nudges-india-on-brics-digital-currency-linkage-for-cross-border-payments\/","title":{"rendered":"RBI Nudges India on BRICS Digital Currency Linkage for Cross-Border Payments"},"content":{"rendered":"<h2><b>BRICS Digital Currency Linkage Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Reserve Bank of India has advised the Indian government to encourage BRICS countries to collaborate on using <\/span><b>digital currencies<\/b><span style=\"font-weight: 400;\"> for cross-border payments. Such a move could reduce transaction costs, speed up settlements, and lower dependence on the US dollar.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, in the near term, it also poses risks related to financial stability, regulatory coordination, cyber security, and differences in digital infrastructure among BRICS members, which would need careful management.<\/span><\/li>\n<\/ul>\n<h2><b>RBI\u2019s Push for BRICS CBDC-Based Cross-Border Payments<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Reserve Bank of India has reportedly proposed that India use its BRICS chairmanship in 2026 to encourage member countries to adopt their <\/span><b>Central Bank Digital Currencies (CBDCs)<\/b><span style=\"font-weight: 400;\"> for cross-border payments.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Though not officially announced, the RBI is said to have conveyed this idea to the Ministry of Finance.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The proposal envisages a <\/span><b>common payments framework<\/b><span style=\"font-weight: 400;\"> covering not only the five founding BRICS members\u2014Brazil, Russia, India, China, and South Africa\u2014but also newer members such as Egypt, Ethiopia, Iran, the UAE, and Indonesia, with more countries likely to join in the future.<\/span><\/li>\n<\/ul>\n<h2><b>About Central Bank Digital Currencies (CBDCs)<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Central Bank Digital Currencies (CBDCs) are legal tender issued by a central bank in fully digital form.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In India, the <\/span><b>RBI\u2019s e-rupee<\/b><span style=\"font-weight: 400;\"> is an example, functioning just like the physical rupee but existing only digitally.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">CBDCs are <\/span><span style=\"font-weight: 400;\">stored in separate digital wallets<\/span><span style=\"font-weight: 400;\">, not bank accounts, and transactions occur directly between wallets, with records maintained on a <\/span><b>blockchain-based digital ledger<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unlike payment systems such as UPI, which transfer money between bank accounts, CBDCs move value itself from one wallet to another.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They also differ from private <\/span><b>cryptocurrencies<\/b><span style=\"font-weight: 400;\"> like Bitcoin, which are <\/span><b>decentralised, unregulated<\/b><span style=\"font-weight: 400;\">, and not backed by any authority.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">CBDCs, by contrast, are centrally issued, regulated, and backed by the central bank, with a fixed value\u2014for instance, one e-rupee is always equal to one rupee.<\/span><\/li>\n<\/ul>\n<h2><b>Benefits of Using Central Bank Digital Currencies (CBDCs)<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Greater Transparency and Traceability<\/b><span style=\"font-weight: 400;\"> &#8211; CBDCs operate on blockchain technology, which creates an immutable and transparent digital ledger.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Once recorded, transactions cannot be altered or deleted, making illicit activities like money laundering and black-money flows easier to detect, especially in cross-border payments.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Programmable Money with Policy Use-Cases<\/b><span style=\"font-weight: 400;\"> &#8211; CBDCs can be programmed for specific purposes.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">They may be <\/span><b>restricted by time<\/b><span style=\"font-weight: 400;\"> (expiry dates), <\/span><b>location, merchant category<\/b><span style=\"font-weight: 400;\">, or type of transaction.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Additional details such as payer and payee identities can also be embedded, further enhancing accountability and targeted use.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Curbing Illicit Cross-Border Flows<\/b><span style=\"font-weight: 400;\"> &#8211; Cross-border transactions are a major channel for illegal money movement.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The transparency and traceability of CBDCs provide authorities with stronger tools to monitor and regulate such flows compared to traditional payment systems.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Geopolitical and Strategic Advantages<\/b><span style=\"font-weight: 400;\"> &#8211; CBDCs can help India navigate international payment challenges arising from sanctions and exclusion from the dollar-dominated SWIFT system, as seen in trade with countries like Iran and Russia.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">A CBDC-based framework offers a more sustainable alternative to settling trade purely in national currencies and could strengthen cooperation within groupings such as BRICS.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><b>Risks and Challenges of Using CBDCs for Cross-Border Payments<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The adoption of CBDCs for cross-border payments faces significant hurdles.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Harmonising<\/b><span style=\"font-weight: 400;\"> legal, regulatory, and technical frameworks across multiple countries is complex and time-consuming, meaning tangible benefits may take years to materialise.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A more immediate risk lies in the <\/span><b>geopolitical response<\/b><span style=\"font-weight: 400;\">, particularly from the United States.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Past statements by U.S. President Donald Trump suggest that efforts by BRICS to <\/span><span style=\"font-weight: 400;\">reduce reliance on the dollar could invite retaliatory measures<\/span><span style=\"font-weight: 400;\">, including higher tariffs.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A shift toward CBDC-based payments could therefore expose India to additional trade penalties, potentially compounding existing tariff pressures.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India will need to carefully balance these economic and strategic costs against the long-term advantages of adopting CBDCs for international payments.<\/span><\/li>\n<\/ul>\n<p><b>Source: <\/b><strong><a href=\"https:\/\/www.thehindu.com\/business\/Economy\/what-is-rbi-nudging-india-to-do-at-brics-explained\/article70547315.ece#:~:text=While%20not%20officially%20announced%2C%20news,to%20facilitate%20cross%2Dborder%20payments.\" target=\"_blank\" rel=\"nofollow noopener\">TH<\/a> | <a href=\"https:\/\/timesofindia.indiatimes.com\/business\/india-business\/rbi-proposes-linking-brics-digital-currencies-says-report-heres-why-it-would-be-an-important-move\/articleshow\/126673026.cms\" target=\"_blank\" rel=\"nofollow noopener\">ToI<\/a> | <a href=\"https:\/\/timesofindia.indiatimes.com\/business\/india-business\/rbi-proposes-linking-brics-digital-currencies-says-report-heres-why-it-would-be-an-important-move\/articleshow\/126673026.cms\" target=\"_blank\" rel=\"nofollow noopener\">FP<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>RBI nudges India on BRICS digital currency linkage to enable CBDC-based cross-border payments, reduce dollar dependence, and reshape global payment systems.<\/p>\n","protected":false},"author":18,"featured_media":84319,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[4942,60,22,59],"class_list":{"0":"post-84197","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-brics-digital-currency-linkage","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\/84197","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=84197"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/84197\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/84319"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=84197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=84197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=84197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}