BRICS Agreed to Build Payment Alternatives in New Delhi

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At the BRICS summit held in New Delhi on September 12, 2026, an official technical mandate was set up to enable local-currency settlements and link the payment systems of its eleven member states. The move is intended as a way of decreasing reliance on Western financial infrastructure after the €210 billion in assets of Russian central banks had been frozen. Because of the geopolitical concerns caused by unilateral sanctions, the finance ministries have been looking for alternative channels for cross-border payments and for deposit services.

There are, nevertheless, serious internal disagreements within the group, especially between the strategic rivals India and China, as well as differences between the various countries concerning the adoption of currency. While India is advocating the use of its Unified Payments Interface in order to reduce transaction costs, China is aiming at extending the international usage of the renminbi. As a result, there arises operational friction. In the end, the creation of a single 'BRICS Pay' system is hampered by the absence of common clearing houses, capital controls, and liquid hedging markets. It is therefore the dollar that still holds the position of being used for international trade invoicing and in the legal infrastructure.

Comment

The fact that India has promoted the Unified Payments Interface (UPI) at the New Delhi summit shows that it is seeking financial independence. Yet, by avoiding the use of the US dollar, India may increase its exposure to China's Cross-Border Interbank Payment System (CIPS), and this exposure represents a structural weakness for India since border tensions remain ongoing along the Line of Actual Control (LAC).

The Reserve Bank of India (RBI) has the problem of having to deal with the rupee balances that foreign exporters such as Rosneft from Russia hold. Since there are no deep Indian debt markets, it is not easy for Russian companies to reinvest these rupee amounts. As a result, the range of bilateral payment channels available to the RBI is smaller than the liquidity provided by the Clearing House Interbank Payments System (CHIPS).

Strategic Question for Discussion

Would the mechanism devised by the Reserve Bank of India be capable of scaling up enough to overcome the Clearing House Interbank Payments System (CHIPS), or would it simply result in the establishment of fragmented liquidity pools?

The pattern indicates that bilateral UPI linkages will stay limited to retail and small-value commercial transactions and won't take the place of existing high-value clearing systems. I believe that if there are no deep and liquid secondary markets for non-dollar currencies, bilateral gateways will certainly lead to fragmented liquidity pools. As a result, large trade settlements will still depend on the existing CHIPS infrastructure for finality and for risk management.

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