BRICS is an influential group of emerging economies. India is hosting the 2026 BRICS summit and is pushing for a system where members can use their own digital currencies (like India’s e-rupee) for direct trade, reducing the need for traditional international banking networks or third-party currencies like the US dollar.

In 2023, under its G-20 presidency, India led the way in creating a ‘Synthesis Paper’ with the IMF and FSB. This paper recommended global standards for regulating cryptocurrencies instead of individual countries having their own separate rules, aiming for better security and stability in the digital economy.

Blockchain is the technology (a digital ledger) that records transactions securely. Cryptocurrency is a digital coin (like Bitcoin) that uses blockchain. The RBI supports blockchain because it makes payments faster and more transparent, but it fears private cryptocurrencies because they are very risky for people to invest their money in.

The RBI’s digital currency (e-rupee) is just like physical cash but in digital form. Since physical cash in your wallet doesn’t earn interest, the CBDC also doesn’t. This prevents people from shifting all their money from commercial banks to the RBI, which could destabilize the banking sector.

UPI (Unified Payments Interface) processes billions of transactions every month in India and is used by almost every shop and individual. Because it is free, fast, and already trusted, the RBI’s new Digital Rupee (CBDC) faces a tough challenge to attract users for daily domestic payments, as UPI already does the job perfectly.

Traditional international money transfers involve multiple ‘middleman’ banks in different countries. Because each country has different rules, criminals often use these systems to hide the source of their illegal money. This is a major global concern for central banks and governments.

The word ‘immutable’ is very important in the digital world. In traditional banking, a record might be altered if someone has the power, but on a blockchain, once a transaction is verified and added, no one can change it. This makes it a very powerful tool for fighting fraud and hidden money flows.

By linking digital payments to IDs like India’s Aadhaar or PAN, the government can easily track who is sending and receiving money. This prevents people from sending money secretly or avoiding taxes, as the ‘flow’ of money is directly connected to their official tax and identity records.

SWIFT is like the ‘Gmail’ of international banking; almost every bank uses it to send payment instructions. When countries like Russia and Iran are banned from SWIFT due to international sanctions, it becomes very hard for India to pay them for imports like oil. A BRICS digital currency linkage would allow these countries to trade directly, bypassing SWIFT entirely.

Donald Trump views the US dollar’s dominance as a vital part of American national security. He has publicly threatened BRICS nations with 100% tariffs if they attempt to move away from using the dollar in international trade, as he considers de-dollarization a direct threat to the US economy.

In this 2026 scenario, the US has already imposed heavy 50% taxes on many Indian exports like gems and textiles. India is now questioning if any ‘incremental’ (additional) taxes threatened by Trump would cause significantly more harm, or if the worst effects have already been felt.