RBI Proposes BRICS Digital Currency Linkage to Boost Trade, Reduce Dollar Reliance

• The Reserve Bank of India (RBI) has proposed linking BRICS digital currencies (CBDCs) to facilitate cross-border trade and tourism payments.
• This initiative aims to gradually reduce dependence on the U.S. dollar, especially amidst geopolitical tensions and trade frictions.
• The proposal is slated for the 2026 BRICS summit, hosted by India, marking a potential formal push for digital currency integration within the bloc.
• India's e-rupee has onboarded 7 million retail users, and China is promoting its digital yuan, with all core BRICS members running CBDC pilot projects.
• Challenges include technical compatibility, governance, and managing trade imbalances, with bilateral forex swap arrangements being considered for settlements.

Why It Matters: RBI proposes linking BRICS digital currencies to ease trade and reduce dollar dependence, signaling a shift in global payments.