India and Russia, two of the BRICS group’s most significant members, are allegedly examining the potential of merging their payment systems. This action comes as both nations seek methods to avoid the financial restrictions placed on Moscow. According to the Economic Times, India’s External Affairs Minister S Jaishankar and Russia’s Deputy Prime Minister Denis Manturov are working together to figure out how to build new payment channels to accomplish this aim.
Integration of India’s Unified Payment Interface (UPI) with Russia’s Faster Payments Systems (FPS) is one of the primary alternatives under discussion. The UPI is a mobile payment mechanism that allows users to transfer payments in real time, while the FPS lets customers to transfer funds between banks using their mobile phone. By connecting these two payment systems, India and Russia want to open up a new channel for cross-border transactions that are not subject to financial penalties.
Another possibility being examined is the use of the Bank of Russia’s Financial Messaging System for cross-border payments. The goal of this initiative is to reduce dependency on the global interbank network SWIFT. SWIFT has been the worldwide payment system’s backbone for decades, but its reliance on the US dollar has put it susceptible to US sanctions. India and Russia may develop a more robust and independent payment system by using the Bank of Russia’s Financial Messaging System.
The discussions between India and Russia take place as the BRICS group works to establish a new global currency independent of the US dollar. For some years, the group, which includes Brazil, Russia, India, China, and South Africa, has been researching the prospect of developing a new currency. Negotiations regarding the features of the new currency are underway, according to Anatoly Aksakov, Russia’s Chairman of the State Duma Committee on the Financial Market, and an agreement might be achieved by the end of the year.
The creation of a new payment system and currency is part of a wider effort to reduce the dominance of the US dollar in international commerce. As the United States maintains financial sanctions against countries around the world, many are looking for ways to reduce their reliance on the US dollar and open up new channels for cross-border transactions. The BRICS group has taken a huge step toward reaching this aim with the negotiations between India and Russia.
