RBI SUGGESTS LINKING DIGITAL CURRENCIES ON THE BRICS AGENDA

NEWS: The Reserve Bank of India (RBI) has recommended that India propose linking the Central Bank Digital Currencies (CBDCs) of BRICS countries on the agenda of the 2026 BRICS Summit, which India will host.

CBDCs

• CBDC (Central Bank Digital Currency) = Digital form of sovereign currency issued by a central bank
• In India: e-rupee
• Unlike crypto: Fully regulated, Legal tender

RBI want BRICS CBDCs to be linked

• Easier cross-border payments: Current international payments rely heavily on SWIFT, correspondent banking–> slow, costly, and dollar dependent
• Reduced dependence on the US dollar: Heavy reliance on the US dollar exposes countries to exchange risk, sanctions
• 2025 BRICS Summit (Brazil): Emphasised interoperability of payment systems

Status of digital currencies in BRICS

• None of the BRICS countries has fully launched a CBDC
• All five members are running pilot projects
• India’s e-rupee: Launched in December 2022, 7 million retail users
• Features: Offline payments, Programmability (e.g. subsidies), Fintech-enabled wallets

Challenges in linking BRICS digital currencies

• Technology & governance issues: Need agreement on interoperable platforms, cybersecurity standards
• Political hesitation: Some countries are cautious about adopting technology from other nations
• Trade imbalance settlement: Linking currencies alone may not solve trade surpluses/deficits