'BRICS Pay' discussions garner attention; UPI model system to end US dollar's dominance?

NEW DELHI: The 18th BRICS summit, commencing on Saturday, will see a significant move towards creating an alternative to the US dollar's dominance in the global financial landscape. Plans are underway to develop a new system called 'BRICS Pay,' modelled after India's UPI, by interconnecting the member nations' instant payment systems and central bank digital currencies.

The core objective is to facilitate trade transactions between member nations without relying on the US dollar as an intermediary by linking systems such as Brazil's Pix, India's UPI, and China's CIPS. Systems like Russia's SPFS are also part of the discussions. Beyond reducing costs and transaction times, the BRICS nations aim to minimise their over-reliance on Western financial systems.

India will highlight the growth achieved by UPI in the international payment sector and its low transaction costs during the summit discussions. The goal is to enable direct international payment facilities for merchants and consumers by interconnecting national payment systems across various countries. Boosting trade in local currencies is also on the agenda.

This paves the way for overcoming American sanctions and reliance on Western financial systems. However, a global financial transaction network that completely bypasses Western systems may not be announced immediately.

There were earlier reports of BRICS nations considering launching their own currency, modelled after the Euro, to reduce the dollar's dominance. India and China are keen on strengthening their own currencies by linking trade and transactions. Russia recently clarified that it does not have a specific 'de-dollarisation' plan to eliminate the dollar, though it added that it remains open to mutually acceptable payment methods.

'BRICS Pay' might be mentioned in the summit's joint statement, serving as a protective shield for BRICS nations to mitigate the impact of global financial market shocks by increasing transactions in local currencies.

11 Countries – A Single Financial Transaction

Objective: Fast and low-cost international financial transactions

Key Challenges: Technical integration, political mistrust, and trade imbalances