BRICS nations explore linking CBDCs and payment systems, RBI chief says

BRICS members are exploring plans to connect their CBDCs and fast payment systems, a move that could cut the cost of moving money between the bloc’s economies, Reserve Bank of India Governor Sanjay Malhotra said on Tuesday.

Malhotra spoke at an event in Mumbai, where he described cross-border transfers as one of the priorities the group keeps returning to. He, however, cautioned that talks were at a very early stage. “Various options are on the table, but it is still at the discussion stage, including CBDCs (central bank digital currencies) and linkages of fast payment systems,” he said.

The governor stated that the appeal was in terms of cost saving: “Cross-border payments is an area of interest for all of us, including the BRICS, because we feel there is a lot of scope for reducing cost.”

Why BRICS linking CBDCs could cut costs

CBDCs are digital forms of countries’ official currencies, issued directly by their central banks. Creating a channel between these currencies could let payments travel more directly and with much more ease between nations. This will cut out layers of intermediaries that money usually passes through and lower what each transfer costs.

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