BRICS+ Payments System Seen as Feasible, but Common Currency Faces Major Challenges

BRICS+ countries should move forward with a joint cross-border payments system to reduce their dependence on the US dollar, while the introduction of a common currency could face significant economic and institutional challenges, according to a report published on Friday. The report by non-profit policy platform BRICS+ Thinking urged the expanded group, led by Brazil, Russia, India, China and South Africa, to strengthen financial cooperation and establish the technical infrastructure needed for the proposed payment mechanism.

The report’s authors, including former Goldman Sachs economist Jim O’Neill, highlighted the importance of cooperation among central banks to make the system operational. BRICS leaders had also reaffirmed their commitment to improving cross-border payments during their September summit in India, focusing on faster and cheaper transactions through linked payment systems and greater use of local currencies. However, efforts to integrate the financial infrastructure of member countries have so far made limited progress.

A shared BRICS+ currency, meanwhile, would require major reforms, including greater central bank independence, a common monetary authority and fewer restrictions on capital movement. The report noted that differences in economic policies, geographical distance and members’ reluctance to surrender monetary control could make the proposal difficult to implement. Although discussions about reducing dollar dependence have gained momentum, countries including India and Russia have previously played down the possibility of introducing a common currency.

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