RBI's Malhotra said BRICS is studying CBDC links to instant rails such as UPI. Cheaper cross-border settlement is the goal; no timeline or mechanism is set.
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BRICS members are studying ways to link their central bank digital currencies and instant payments systems, Reserve Bank of India Governor Sanjay Malhotra said Aug. 11 in Mumbai. The target is cheaper, faster cross-border settlement among Brazil, Russia, India, China and South Africa.
Malhotra stopped short of announcing a program. He gave no timeline and named no mechanism. The work, as he framed it, is a shared interest among BRICS central banks rather than a formal project. Whether the group favors a hub-and-spoke model or bilateral links between individual members is unclear.
No member has laid out a roadmap. The discussions are preliminary, he said, and technical and regulatory aspects have not been detailed publicly.
The five members are at different stages of CBDC development. China's digital yuan is the furthest along. India has been running pilots with its digital rupee, and the other three are earlier. A CBDC is a digital liability of the central bank; an instant payments network, of the kind India already runs with UPI, moves commercial bank money in near real time. The BRICS exploration covers both, and each member runs its own domestic payments infrastructure and its own regulatory regime. Together the five account for a large chunk of global trade.
Cost is the problem the BRICS effort targets. The correspondent banking system was built for control rather than speed. A payment from Mumbai to São Paulo can pass through three or four correspondent banks, each charging a fee and adding latency, and settlement can take days. Businesses and individuals moving money between member countries feel that friction directly. India's UPI network shows what fast domestic settlement looks like. Layering CBDC rails on top of systems of that kind would remove the intermediaries and the fees they collect.
Regulatory harmonization is the hard part. Five sets of financial regulators would need to agree on data standards and anti-money-laundering rules before a link could operate. Settlement finality across five legal systems is a separate open question. None of this has been worked out in public.
Sovereignty is the other constraint.
A connected network would give one country's regulator visibility into another's payment flows, a trade-off no central bank makes easily.
The project cuts two ways for the broader crypto market. State-issued digital currencies have long been cast as rivals to decentralized crypto. A BRICS link that actually worked would validate the argument that tokenized settlement beats correspondent banking on speed and cost.
International payment integrations have a long record of taking longer than announced or stalling in committee. The BRICS group has been pushing financial cooperation harder in recent years, partly in response to the dollar's role in trade settlement and partly because members want cheaper ways to settle among themselves. No technical paper has been published, and no approvals have been granted. The group's only commitment so far is to keep exploring feasibility.
Malhotra made the remarks at a formal event, an appearance that puts the exploration on the record. Further technical and regulatory discussions are expected, he said, though no date has been attached.
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