The Hindu: Published on 5th November 2025.
Why in News?
The BRICS group (Brazil, Russia, India, China, South Africa, and now Iran) has accelerated efforts to create its own cross-border payment network (BRICS Pay) to reduce dependence on the SWIFT system, which is controlled by Western financial powers.
This move aims to promote financial sovereignty, minimize exposure to U.S. sanctions, and challenge the dollar-dominated global financial order.
The 2024 Kazan Summit was a turning point where BRICS leaders emphasized settling trade in local currencies and strengthening intra-BRICS banking systems.
Background:
For over a decade, BRICS nations have aimed to reform the Western-led global financial structure.
In 2014, the Fortaleza Summit led to the creation of the New Development Bank (NDB) and Contingent Reserve Arrangement (CRA) — marking the first time developing countries built their own multilateral financial institutions.
After Russia faced Western sanctions in 2015, BRICS began exploring use of national currencies for trade.
In 2017, BRICS agreed to coordinate on currency swaps and local currency settlements.
By 2024, the grouping had established the BRICS Payments Task Force to develop an alternative cross-border system — now known as BRICS Pay.
Key Developments:
BRICS Pay Prototype: A demonstration was unveiled in Moscow in October 2024, symbolizing real progress.
BRICS Banknote: The unveiling of a symbolic “BRICS Banknote” at the Kazan Summit drew global attention and political reactions, including threats of 100% tariffs by Donald Trump if a BRICS currency emerged.
National Payment Systems:
Russia: SPFS (System for Transfer of Financial Messages)
China: CIPS (Cross-Border Interbank Payment System)
India: UPI (Unified Payments Interface)
Brazil: Pix
These systems provide a technical foundation for a unified BRICS Pay platform.
Key Issues:
Diverse National Interests: Each member seeks to promote its own system globally — India with UPI, China with CIPS, etc.
Interoperability Challenge: Integrating different national systems into one network is complex.
Geopolitical Pressure: Western nations, particularly the U.S., view BRICS Pay as a threat to dollar hegemony and global financial stability.
Significance:
Financial Independence: Reduces reliance on SWIFT and the U.S. dollar.
Protection from Sanctions: Offers member countries an alternative route for transactions under Western restrictions.
Boost for South-South Cooperation: Enhances economic cooperation among developing nations.
Strategic Leverage: Gives BRICS a stronger voice in global financial governance.
Challenges:
Technical Compatibility: Creating a seamless cross-border system is highly complex.
Trust Deficit: Differences between India and China may hinder progress.
Western Retaliation: Possible sanctions or trade barriers from the U.S. and EU.
Limited Global Acceptance: It will take time before non-BRICS nations adopt the new system.
Future Outlook:
- Despite hurdles, BRICS Pay represents a historic step toward a multipolar financial order.
- If political unity strengthens — especially under external pressure like Trump’s proposed tariffs — the group may accelerate the launch.
- In the long term, a functional BRICS payment network could reshape international finance and weaken Western financial dominance.
