India's Central Bank Proposes Linking BRICS Digital Currencies to Streamline Trade
India's central bank, the Reserve Bank of India (RBI), has proposed a groundbreaking initiative to link the digital currencies of BRICS member countries, aiming to simplify cross-border trade and payments in tourism. This move could potentially reduce the world's reliance on the US dollar, according to a Reuters report. The proposal, based on a declaration from the 2025 BRICS summit in Rio de Janeiro, emphasizes the need for payment system compatibility to enhance mutual trade efficiency.
The BRICS Bridge platform, developed by the Russian Ministry of Finance, is a key component of this initiative. It facilitates settlements in national currencies, including digital ones, among the BRICS member countries. China, a major player in this bloc, has made significant progress with its e-CNY, with digital yuan transactions soaring over 800% since its pilot launch in 2023, surpassing $2.3 trillion.
China's strategy combines interest income and stablecoin-like functionality while maintaining sovereignty and regulation. The mBridge platform, initially launched by the Bank for International Settlements (BIS) Innovation Hub, has seen remarkable growth. Since the BIS's exit in October 2024, mBridge has processed over 4,000 cross-border transactions worth approximately $55.49 billion, a 2,500-fold increase compared to 2022. The digital yuan accounts for a staggering 95.3% of the total transaction volume.
Experts at the Atlantic Council suggest that the mBridge project may gradually weaken the dollar's dominance in specific corridors, sectors, and use cases, rather than directly challenging it. They note that China and its partners are building parallel settlement systems, reducing reliance on existing ones. This shift could potentially make the US lose the digital currency race to China, as warned by Coinbase and SkyBridge Capital founder Anthony Scaramucci, who criticized US banks for undermining stablecoins in favor of China.
