CBDC at BRICS: Tokenisation Will Make It Easy

India is preparing to put a potentially transformative idea on the table at the BRICS Summit in New Delhi on September 12–13: deeper integration of central bank digital currencies (CBDCs) and cross-border digital payment systems.

The proposal is not about creating a single BRICS currency. Instead, the focus is on connecting the digital currencies and payment infrastructure of member countries so that businesses and individuals can transact across borders more quickly, cheaply and efficiently.

This is where tokenisation could become a critical technology layer.

At its simplest, tokenisation converts an asset or monetary claim into a programmable digital representation that can move across a digital network. Applied to payments, tokenised currencies could enable transactions to be processed digitally, with rules governing settlement, compliance and transfer built directly into the infrastructure.

India already has a powerful example of what frictionless digital payments can look like through UPI. The next challenge is taking that experience beyond national borders.

A tokenised, interoperable payment framework could allow a buyer in India to make a payment in digital rupees while a seller in another BRICS economy receives the corresponding value in their domestic digital currency. Instead of relying on multiple intermediaries and correspondent banks, the transaction could be settled through connected digital payment rails.

The potential benefits are significant.

Speed is one. Cross-border payments could move closer to the near-instant experience users already expect from systems such as UPI.

Cost is another. Reducing the number of intermediaries involved in international settlements could lower transaction fees and settlement friction.

Tokenisation could also support greater use of local currencies in intra-BRICS trade. Rather than routing transactions through the US dollar simply because it is the dominant intermediary currency, connected digital currencies could enable more direct settlement between participating economies. This could gradually reduce dependence on dollar-based payment corridors without requiring the creation of a common BRICS currency.

Smart contracts could add another layer of efficiency. Compliance checks, transaction limits, settlement conditions and other rules could potentially be automated, creating a more transparent and programmable financial infrastructure.

There are, however, major challenges. Different countries use different CBDC architectures, regulatory frameworks and payment standards. Interoperability will therefore be critical. Technology can help bridge these systems through common protocols, APIs and settlement standards, but governance and regulatory coordination will be just as important.

Exchange-rate volatility is another issue. A common settlement framework would need transparent foreign-exchange mechanisms rather than assuming that participating currencies have stable relative values.

India's proposal could therefore represent something bigger than another digital-payment initiative. If BRICS can connect existing CBDCs and fast-payment systems through interoperable, tokenised infrastructure, it could create a new model for cross-border payments — one that is faster, programmable and more closely aligned with local currencies.

The real opportunity may not be to build a new currency.

It may be to build the technology that allows existing currencies to move seamlessly across borders.