Central Bank Digital Currencies (CBDCs) are sovereign digital forms of national currencies issued by central banks. Their interoperability can facilitate faster and more efficient trade settlement among BRICS countries.
Role in cross-border settlement
- CBDCs can enable near-real-time, direct settlement, reducing dependence on correspondent banks and intermediaries.
- They can lower transaction costs and address time-zone and liquidity-related delays.
- Settlement in domestic currencies may reduce exchange-rate risks and dependence on dominant reserve currencies.
- Programmable payments can automate trade-finance processes through smart contracts.
- A common CBDC platform could enhance financial inclusion, transparency and intra-BRICS trade.
Challenges
- Different CBDC architectures, technical standards and levels of digital readiness hinder interoperability.
- Cyberattacks, system failures, privacy breaches and risks to transaction data threaten trust.
- Regulatory differences concerning anti-money laundering, capital controls, taxation and data localisation complicate coordination.
- Legal uncertainties arise regarding jurisdiction, settlement finality and dispute resolution.
- Geopolitical mistrust and monetary-sovereignty concerns may obstruct data-sharing and common governance.
Thus, BRICS requires interoperable standards, robust cybersecurity and a mutually accepted regulatory framework for CBDC-based settlements.
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