BRICS Finance Chiefs Back Wider Local-Currency Trade as Payment Cooperation Deepens
BRICS countries are trying to make it easier to do business without automatically routing transactions through a third currency.
Finance ministers and central bank governors meeting in Mumbai on September 10 backed greater use of national currencies in trade and investment, alongside further work on connecting cross-border payment systems. The discussions took place under India’s 2026 BRICS chairship ahead of the leaders’ summit in New Delhi.
The direction is significant, but narrower than some of the debate surrounding BRICS and the US dollar suggests.
No common BRICS currency was announced. Nor did the group unveil a single payment network intended to replace existing international systems.
Instead, the finance chiefs focused on a more immediate objective: making transactions between member economies faster, cheaper and easier while giving businesses more opportunities to settle directly in national currencies.
Local-Currency Settlement Moves From Politics to Infrastructure
BRICS has been discussing greater use of local currencies for years. The harder task is building financial infrastructure that makes those transactions commercially practical.
That work is continuing through initiatives including the BRICS Payment Task Force and discussions on cross-border payment connectivity.
For an importer and exporter operating in two member countries, direct settlement can potentially remove an additional currency conversion. That may reduce transaction costs and exposure to movements in a third currency.
The economics, however, depend on the currencies involved.
Companies need sufficient liquidity, competitive exchange rates and financial institutions willing to provide settlement and hedging services. Capital controls and different national regulations can further complicate transactions.
Those constraints explain why BRICS has increasingly concentrated on connecting existing systems rather than trying to replace them with a single architecture.
This Is Not a BRICS Currency Announcement
The distinction is particularly important because proposals involving BRICS are frequently described through the language of de-dollarisation.
Greater use of the rupee, yuan, real or other member currencies could reduce the need for dollars in some bilateral transactions. That is not the same as creating a shared currency capable of competing directly with the dollar.
The Mumbai discussions did not produce such a currency.
They also did not establish a unified BRICS payment system.
Instead, member countries supported continued work under the BRICS Cross-Border Payments Initiative and related efforts to improve interoperability among financial systems.
That is a more achievable goal for a bloc whose members operate under very different monetary regimes.
BRICS includes economies with varying exchange-rate policies, capital controls, financial regulations and relationships with Western markets. A common currency would require a level of monetary coordination far beyond the payment cooperation currently under discussion.
India, Brazil Offer Examples of Domestic Payment Scale
Several BRICS members already operate sophisticated digital-payment systems at home.
India’s Unified Payments Interface has transformed domestic instant payments, while Brazil’s Pix has achieved similarly widespread adoption.
Cross-border payments present a different challenge.
A domestic transfer can move within one regulatory and banking framework. An international transaction may pass through several institutions while requiring currency conversion, compliance checks, messaging and final settlement across different financial systems.
Reducing those layers could lower costs, particularly for smaller businesses and remittance users.
India has separately explored whether central bank digital currencies could eventually play a role in BRICS cross-border transactions. Reuters reported ahead of the Mumbai meeting that New Delhi was pushing a proposal involving links between members’ CBDCs.
That proposal should not be confused with an approved BRICS digital currency. The finance ministers’ meeting did not announce one.
Why BRICS Wants More Payment Options
The financial initiative is unfolding against a more fragmented global trade environment.
BRICS finance leaders cited geopolitical tensions, protectionism, policy uncertainty, debt vulnerabilities and other pressures facing the world economy. They also criticised unilateral trade and finance-related measures, including tariff and non-tariff barriers.
For some members, alternative payment channels have an obvious strategic appeal.
Russia and Iran, both subject to extensive Western sanctions, have strong incentives to reduce dependence on financial infrastructure vulnerable to restrictions.
The calculations are different for countries such as India, Brazil and the United Arab Emirates, which maintain substantial economic relationships with Western markets.
That difference helps explain the measured language around local currencies.
Expanding settlement options allows BRICS members to pursue greater financial flexibility without requiring every country to adopt the same position toward the dollar or the existing international financial system.
The Dollar’s Position Is Harder to Replicate Than Replace in Individual Trades
Using fewer dollars for bilateral trade does not automatically weaken the currency’s wider international role by the same proportion.
The dollar remains deeply embedded in global finance because of more than trade invoicing. It is widely used in foreign-exchange markets, international borrowing, commodity pricing and central-bank reserves.
The depth and liquidity of US financial markets also matter.
A business may be willing to receive a partner country’s currency only if it can spend, invest or convert that money efficiently. If trade between the two economies is heavily unbalanced, one side can accumulate currency it has limited use for.
That is one of the practical obstacles local-currency arrangements have to solve.
The success of the BRICS initiative will therefore depend on whether national currencies become convenient to hold and exchange, not simply whether governments encourage their use.
New Development Bank Expands the Local-Currency Approach
The New Development Bank offers another route for BRICS to reduce currency mismatches.
Established in 2015, the Shanghai-based institution finances infrastructure and sustainable-development projects in emerging economies. BRICS governments have encouraged it to increase lending in members’ national currencies where practical.
There is a financial logic behind that strategy.
An infrastructure project earning revenue in a domestic currency but repaying dollar-denominated debt can face sharply higher financing costs if its currency weakens against the dollar.
Borrowing in the same currency as the project’s revenue can reduce that exposure.
Local-currency lending does not eliminate risk. The bank still has to raise funds efficiently, manage its own currency exposure and find sufficiently deep capital markets.
At the Mumbai meeting, the NDB also approved its third General Strategy, covering 2027 to 2031.
BRICS Renews Call for IMF and World Bank Reform
The finance discussions extended beyond payments.
BRICS officials again called for greater representation for emerging and developing economies in institutions including the International Monetary Fund and World Bank.
The argument is that voting power and governance should better reflect changes in the distribution of economic activity across the world.
It is a longstanding BRICS position, but the expansion of the grouping has increased its collective weight.
Alongside Brazil, Russia, India, China and South Africa, the bloc now includes Egypt, Ethiopia, Iran, the United Arab Emirates and Indonesia.
Expansion gives BRICS a wider geographic and economic base. It also makes financial coordination more complicated because members have different trade patterns, monetary systems and strategic priorities.
The Hard Part Begins After the Political Agreement
The attraction of local-currency trade is easy to describe. Making it routine is more difficult.
Banks need efficient settlement infrastructure. Businesses need predictable exchange rates and access to hedging. Regulators need systems that can communicate without weakening safeguards against financial crime or destabilising capital flows.
There is also the basic problem of demand.
Companies will use new payment arrangements at scale only when they are competitive with the systems already available. Political encouragement can create the framework, but cost, speed, liquidity and reliability will determine whether businesses actually adopt it.
That makes the technical work on interoperability potentially more consequential than the rhetoric around replacing the dollar.
BRICS is not creating a new currency in Mumbai. It is trying to expand the financial routes available between its member economies.
If those routes become cheaper and easier to use, local currencies could gradually capture a larger share of trade within the bloc. How far that process goes will depend on whether the infrastructure can deliver advantages strong enough for businesses to change the way they already transact.
