The objective is to decouple from SWIFT for the sake of continuity, rather than pursuing full de-dollarization or a systemic rupture.
In an environment of escalating tariff threats, economic sanctions, and dysfunctional payment mechanisms, the call by the Reserve Bank of India (RBI) for CBDC-based settlements among BRICS nations is both timely and necessary. India's pursuit of alternative payment arrangements is dictated by pragmatic needs for resilience and autonomy, not by ideology. The goal is to ensure operational continuity by creating a bypass for SWIFT, ensuring that trade remains insulated from external political pressures.
The mBridge model and blockchain architecture
India's exploration of cross-border settlements via its digital currency, the e-rupee, reflects a geostatgic effort to "de-weaponize" payment infrastructures. Unlike common narratives, this is not an attempt to launch a common BRICS currency. Instead, the focus is on a blockchain-based architecture, similar to the BIS Innovation Hub’s mBridge initiative. In this model, national CBDC ledgers remain sovereign and isolated, while a neutral bridge layer allows for "payment-versus-payment" (PvP) settlements. This eliminates settlement risk without requiring a unified monetary authority.
India’s infrastructure advantage
The experience of the Reserve Bank of India is critical here, as it has already successfully piloted both Wholesale CBDC (e₹-W) and Retail CBDC (e₹-R). At the wholesale level, the e₹-W allows for interbank settlements, such as government bond transactions, directly in central bank money. Retail transactions are settled instantly between digital wallets, often bypassing traditional interbank messaging systems. This places India in a primary position to adopt a distributed ledger model that offers efficiency gains without the risks of monetary fusion.
Policy implications and regulatory limits
Since the Indian rupee is not fully convertible on the capital account, uncontrolled cross-border CBDC flows are legally impermissible. Under the FEMA Act of 1999, every transaction must be monitored for direction and purpose. Consequently, any cross-border use of the e-rupee would require "programmable" features to bake capital controls into the currency itself. The policy direction is clear: non-resident access will be restricted to strictly defined corridors to prevent the e-rupee from becoming an offshore currency like the Eurodollar.
The road ahead for financial autonomy
As the United States increasingly utilizes dollar-backed stablecoins to extend its financial power, it is clear that monetary hegemony is being digitally redesigned rather than fading away. For the BRICS nations, asserting financial autonomy without fragmenting the global system is the new imperative. A wholesale CBDC framework offers a pragmatic answer. For India, this means anchoring arrangements to trade settlements, avoiding the volatility of uncontrolled capital flows.
The Reserve Bank of India is positioned to lead this effort, acting as an institutional coordinator for the Global South. By focusing on ISO 20022 compatibility and RBI-controlled exchange mechanisms, India can present a non-weaponized, inclusive model of cooperation. This is not a total monetary reinvention but a piece of strategic engineering designed to reduce coercive exposure and enhance collective resilience in an increasingly hegemonic financial order.
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