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Introduction

The BRICS Cross-Border Payments Initiative (BRICS Pay) aims to establish a digital payment system enabling local currency settlements among BRICS members, reducing dependence on the SWIFT network dominated by Western institutions. Despite its potential to boost financial autonomy, internal divergences, technological hurdles, and geopolitical pressures pose major challenges to its implementation.

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Challenges in Implementation of BRICS Pay

• Divergent National Priorities and Currency Ambitions: Each BRICS member promotes its own payment network, leading to competing interests and limited coordination.
  Eg: China’s CIPS operates across 120 countries, while India’s UPI is promoted in nine nations, creating friction in adopting a unified BRICS platform.
• Lack of Technological Interoperability: The varied technical structures of UPI (India), CIPS (China), SPFS (Russia), and Pix (Brazil) make integration complex.
  Eg: The BRICS Payment Task Force is still working on pathways for interoperability among these systems.
• Geopolitical Tensions and External Pressures: Strategic rivalries and sanctions risks undermine consensus within BRICS.
  Eg: The inclusion of Iran and U.S. threats of 100% tariffs under President Trump created external pressure on member states.
• Absence of a Common Legal and Regulatory Framework: Diverse financial regulations and data protection laws hinder the creation of a cohesive regulatory structure.
• Limited Institutional Coordination and Trust Deficit: Varying levels of economic dependence and mistrust slow policy alignment.
  Eg: Russia is enthusiastic about BRICS Pay, while India and Brazil remain cautious, delaying collective progress.

Way Forward

• Unified Technical Architecture under BRICS Payment Task Force: Develop a common digital framework integrating existing national systems through secure and standardized interfaces.
  Eg: The prototype of BRICS Pay unveiled in Moscow (2024) was a key step toward harmonizing digital payment systems.
• Strengthen Institutional Coordination Mechanisms: Create a BRICS Financial Coordination Council for regular policy dialogue among central banks.
  Eg: The Rio Summit Declaration (2024) called for continuous engagement on interoperability and governance standards.
• Promote Local Currency Settlement Agreements: Encourage trade invoicing and payments in domestic currencies to reduce dollar dependence.
  Eg: Since 2015, BRICS has promoted currency swaps and local currency investments for internal trade.
• Enhance Cybersecurity and Data Protection Standards: Establish shared cybersecurity protocols to safeguard transactions and build user trust.
  Eg: Joint digital security frameworks can address data privacy and prevent digital espionage among BRICS members.
• Leverage BRICS Financial Institutions for Integration: Align the New Development Bank (NDB) and Contingent Reserve Arrangement (CRA) with BRICS Pay for liquidity support and oversight.

Conclusion

BRICS Pay offers an opportunity to create an alternative global payment ecosystem, reducing dependence on Western-controlled networks. To realize this vision, BRICS nations must prioritize interoperability, institutional trust, and technological security. A coordinated, transparent, and inclusive financial architecture can make BRICS a driving force in reshaping global financial governance.

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