BRICS has moved away from the idea of creating a single common currency to challenge the US dollar, choosing instead to build a network of local-currency payment systems and cross-border settlement mechanisms. According to official statements from the 18th BRICS summit hosted in New Delhi, leaders from member states are prioritizing practical financial interoperability over the complex task of launching a shared currency for the expanded geopolitical bloc.
BRICS Shifts Focus to Local Currency Trade Settlements
Rather than establishing a single currency to replace the dollar, BRICS is actively pursuing a network of bilateral trade settlement systems. According to Sudhakar Dalela, India’s Secretary for Economic Relations, there is currently no proposal for a common currency for the expanded group. Speaking at the summit in New Delhi, Dalela explained that ongoing discussions center on bilateral trade settlements using local currencies to help reduce transaction costs and simplify cross-border payments.
This strategic shift found formal backing in the New Delhi Declaration. The document explicitly stopped short of endorsing a shared BRICS currency. Instead, leaders committed to backing work on more efficient cross-border payment mechanisms. Member states will continue discussions on utilizing BRICS local currencies for both trade settlements and capital investments.
Payment Interoperability and Task Force Findings
The New Delhi Declaration officially recognized the ongoing technical work of the BRICS Payment Task Force. According to the document, the task force focuses heavily on payment interoperability and cross-border transactions. However, the declaration notes that there is no single approach that would suit all members given their diverse domestic economies.
Reporting by Reuters indicates that the summit heavily emphasized local-currency trade alongside interoperability between central bank digital currencies. Despite these shared goals, differences remain among members regarding the ultimate design of the overarching BRICS payment infrastructure. South African President Cyril Ramaphosa voiced strong support during the summit for greater use of local currencies and enhanced cross-border payment systems, aligning directly with the bloc’s drive to connect its financial institutions.
Expanding Local Currency Financing Through the NDB
Beyond bilateral trade, the bloc is encouraging the New Development Bank (NDB) to expand its financing in local currencies. According to summit outcomes, diversifying the NDB’s funding sources will give local-currency financing a much larger role in funding vital infrastructure and development projects across emerging economies.
This direction carries direct implications for Africa.
Frequently Asked Questions
Is BRICS still creating a single currency?
No. According to Indian officials at the New Delhi summit, there is currently no proposal for a common currency. The bloc has moved away from that idea to focus on local-currency settlements.
How will BRICS members trade without the US dollar?
Members are working to make their payment and messaging systems interoperable, allowing direct settlement of cross-border trade using their own national currencies.
What did the New Delhi Declaration say about payments?
The declaration recognized the BRICS Payment Task Force and backed efficient cross-border payment mechanisms while noting that no single approach fits all members.
What role does the New Development Bank play?
The bloc is encouraging the NDB to expand its financing in local currencies and diversify funding sources to support infrastructure projects in emerging economies.
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