As India prepares to host the upcoming BRICS summit later this year, discussions around global payments are back in focus. While social media and online reports have talked about a possible “BRICS currency” to replace the US dollar, the reality is far less dramatic.

What BRICS countries are looking at is not a new currency, but a shared payment system that links their own digital currencies.

Here’s what that really means.

Earlier reports suggested BRICS might launch a single common currency. That idea faced major hurdles. Every country has different inflation levels, money controls, and economic priorities. There were also concerns that China’s currency could dominate such a system.

To avoid these problems, BRICS is now exploring a payment system based on central bank digital currencies (CBDCs). This approach allows countries to keep full control over their own money while making cross-border payments easier.

In short, each country keeps its currency, but the way payments move between them changes.

How BRICS digital payment system would work

According to a report by Asia Times, the plan is to connect existing digital currencies through a common payment platform.

This would include:

  • India’s digital rupee

  • China’s digital yuan

  • Russia’s digital ruble

Instead of using dollar-based systems likeSWIFT, countries could settle trade directly in their own digital money. This would reduce costs, save time, and cut dependence on foreign banks.

India is shaping this idea in a major way. As the summit host, New Delhi has pushed for interoperability, not a shared currency.

This thinking comes from India’s own success with Unified Payments Interface (UPI), where different banks and apps work smoothly together without losing control.

The Reserve Bank of India has also made its position clear. The digital rupee is not crypto and not part of a currency union. It is simply digital sovereign money.

There is also a practical reason. In earlier trade with Russia, India faced the “rupee trap”, where Russia ended up holding large amounts of rupees it could not easily use. A multilateral system helps avoid such problems.

The proposed system rests on two simple concepts:

Settlement cycles

Countries would not settle every trade instantly. Instead, payments would be added up over time, and only the final balance would be paid.

For example, if China buys goods worth 500 billion rupees from India and sells goods worth 450 billion rupees in return, only the remaining 50 billion rupees would be settled. This reduces pressure on the money supply and lowers costs.

Forex swap lines

If a country suddenly needs another currency to settle its balance, central banks can temporarily swap currencies. This acts as a safety net during sudden trade shocks.

This is not about replacing the dollar

Despite the headlines, the BRICS payment system is not designed to kill the US dollar.

The dollar still dominates global finance. Around 59 per cent of global reserves and nearly 58 per cent of international payments are dollar-based.

However, concerns are growing. US national debt is nearing 39 trillion dollars, while global debt stands at about $315 trillion. A large part of this debt is linked to the dollar, making many countries vulnerable to US policy changes.

Why countries want a backup system

Geopolitics has made payment systems a strategic issue. Russia’s removal from SWIFT and the freezing of $300 billion showed that even large economies can be cut off.

Countries like Iran, North Korea, and Cuba faced similar actions earlier, but Russia’s case raised fresh alarms.

A BRICS payment system would not replace the existing system but act as a backup, helping trade continue if global networks fail.

When could the system become a reality?

The rollout will take time. Most digital currencies are still in trial stages, and legal rules differ across countries.

The likely path is gradual. It may begin with bilateral links and slowly expand into a wider network.

India already offers a working example. UPI is interoperable with the UAE’s payment system. Brazil’s PIX and China’s digital platforms could follow similar paths.

Over time, these links could come together to form a shared BRICS payment layer, focused on efficiency, not dominance.