RBI Proposes BRICS Digital Currency Link to Counter US Dollar Dominance

• The Reserve Bank of India (RBI) has proposed linking BRICS countries' official digital currencies (CBDCs) for easier cross-border trade and tourism payments.
• This initiative aims to reduce reliance on the US dollar amidst rising geopolitical tensions and could be on the agenda for the 2026 BRICS summit hosted by India.
• The proposal builds on a 2025 BRICS declaration for interoperability in payment systems and aligns with RBI's goal to expedite cross-border transactions using India's e-rupee.
• While all five main BRICS members (Brazil, Russia, India, China, South Africa) are running CBDC pilot projects, none have fully launched their digital currencies.
• Challenges include achieving technological interoperability, establishing governance rules, and managing trade imbalances, potentially through bilateral foreign exchange swap arrangements.

Why It Matters: RBI proposes linking BRICS digital currencies to boost trade and tourism, aiming to reduce US dollar reliance.