The BRICS Gambit, De-Dollarization, Payment Sovereignty, and the Quest to Challenge SWIFT

The BRICS Gambit, De-Dollarization, Payment Sovereignty, and the Quest to Challenge SWIFT

For over a decade, the BRICS grouping—originally Brazil, Russia, India, China, and South Africa, and now expanded to include nations like Iran—has been engaged in a quiet but determined project. Its goal is to rewire the architecture of the global financial system, reducing its members’ dependence on a Western-dominated order that has prevailed since the end of the Second World War. This ambition, once a theoretical discussion point in economic forums, has rapidly crystallized into a concrete agenda, driven by geopolitical shifts, the weaponization of finance, and a collective desire for greater strategic autonomy. At the heart of this project lies a direct challenge to two pillars of Western financial hegemony: the dominance of the U.S. dollar and the ubiquity of the SWIFT payment messaging network. The development of the BRICS Cross-Border Payments Initiative, colloquially known as BRICS Pay, represents the most ambitious step yet in this journey. However, this path is fraught with complexity, navigating a maze of national ambitions, technical hurdles, and the immense inertia of the existing global system.

The Genesis of a Counter-System: A Decade of Deliberate Steps

The BRICS journey toward financial independence did not begin overnight. It has been a gradual process, accelerating in response to specific geopolitical events that highlighted the vulnerabilities of reliance on Western financial channels.

The Fortaleza Summit in 2014 marked a foundational moment. It was here that the BRICS nations announced the creation of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). This was a historic move; for the first time, a coalition of developing countries had established major financial institutions that were, until then, the exclusive preserve of advanced economies in Europe and North America. The NDB was envisioned as an alternative to the World Bank, aimed at mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging economies. The CRA, similarly, was conceived as a firewall against global liquidity pressures, an alternative to the International Monetary Fund where countries could seek assistance without the stringent conditionalities often imposed by the West.

The geopolitical catalyst for a more direct challenge to the financial system came in the aftermath of the annexation of Crimea in 2014. The swift and severe imposition of Western sanctions on Russia, which included threats of disconnection from the SWIFT network, sent a shockwave through Moscow and other capitals wary of U.S. power. It was a stark demonstration that access to the global financial bloodstream could be revoked as a tool of foreign policy. In response, the BRICS grouping decided to actively explore expanding the use of their national currencies in transactions between themselves, seeking to bypass the dollar altogether.

This intent was formalized in 2017, when the members agreed to deepen currency cooperation through mechanisms like currency swaps, local currency settlement, and local currency direct investment. The turn of the decade saw the ambition become more technical with the agreement to set up a BRICS Payments Task Force. The goal was to move from theory to practice, developing the blueprint for a system to facilitate seamless transactions between member countries. All these threads seemed to come together at the Kazan Summit in 2024, where leaders officially underscored the importance of the “BRICS Cross-Border Payments Initiative” and the need to strengthen correspondent banking networks to enable settlements in local currencies.

BRICS Pay: The Concrete Challenge to SWIFT’s Dominion

The BRICS Cross-Border Payments Initiative, or BRICS Pay, is the tangible manifestation of years of planning. It is a direct attempt to create a viable alternative to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network. SWIFT, a Belgian-based cooperative, is the central nervous system of global finance. Used by over 11,000 banks and financial institutions, it is the messaging platform that facilitates the vast majority of international money transfers. While SWIFT is technically neutral, its governance is dominated by central banks from G10 countries, and its operational compliance with U.S. and EU sanctions laws gives Western powers significant leverage.

BRICS Pay aims to reduce this dependence. The motivation is twofold:

1. Financial Sovereignty: To reclaim control over their own financial transactions, free from the oversight and potential veto of Western powers.

2. Sanctions Insulation: To create a protected financial channel that would allow member states, particularly those like Russia and Iran who face severe sanctions, to continue engaging in international trade.

The symbolic weight of this project was amplified at the Kazan Summit with the unveiling of a prototype BRICS banknote. While largely a conceptual gesture, it ignited global discussions and sent a powerful message about the long-term intent to move away from dollar dominance. This move was significant enough to provoke a reaction from then-President-elect Donald Trump, whose threats against the grouping only served to reinforce the very motivations behind BRICS Pay.

The Building Blocks: National Systems and the Interoperability Imperative

A key strength of the BRICS Pay proposal is that it is not being built from scratch. Each of the major BRICS economies has already developed sophisticated domestic or regional payment infrastructures that can serve as foundational pillars:

• Russia’s System for Transfer of Financial Messages (SFPS): Created in response to the 2014 sanctions threats, SPFS is Russia’s direct analogue to SWIFT. While initially limited, its reach has expanded, with participants in over 120 countries, including all BRICS members except India. Its adoption is a geopolitical necessity for many of Russia’s trading partners.

• China’s Cross-Border Interbank Payment System (CIPS): CIPS is a critical component of China’s strategy to internationalize the Renminbi (RMB). While it still often relies on SWIFT for messaging, it provides a clearing and settlement system that reduces reliance on dollar-clearing channels. China’s economic heft and the RMB’s inclusion in the IMF’s Special Drawing Rights basket have given CIPS significant global traction.

• India’s Unified Payments Interface (UPI): A remarkable success story in digital payments, UPI is a real-time payment system that has revolutionized the Indian economy. Its model is being exported, with acceptance in several countries. For BRICS Pay, UPI offers a proven, scalable, and efficient model for retail and low-value cross-border transactions.

• Brazil’s PIX system: Launched in 2020 by the Brazilian Central Bank, PIX is an instant payment platform that has achieved widespread adoption in Brazil and is gaining influence across Latin America. Like UPI, it represents a state-of-the-art, centralized system for fast digital payments.

The challenge, however, lies not in the quality of these individual systems, but in their interoperability. Creating a cohesive BRICS Pay network requires seamlessly linking Russia’s SPFS, China’s CIPS, India’s UPI, and Brazil’s PIX. This involves overcoming significant technical, regulatory, and linguistic hurdles to ensure that a payment initiated in Mumbai via UPI can be received and settled in São Paulo via PIX, using a message routed through SPFS and cleared in RMB via CIPS, all without passing through SWIFT or dollar-correspondent banks. Achieving this level of integration is essential for BRICS Pay to rival SWIFT in reliability, even if its initial scope is more limited.

The Fault Lines: National Ambitions vs. Collective Action

The October 2024 prototype demonstration of BRICS Pay in Moscow was an important milestone, but it also revealed underlying tensions. As noted in the source material, “Russia is most enthusiastic about this project, but the remaining original BRICS nations seem to have become circumspect.”

This circumspection stems from the competing desire of each major power to promote its own financial platform globally. India is aggressively marketing UPI as a digital public good. China is focused on establishing the RMB as a global reserve currency and CIPS as a key infrastructure. Brazil sees PIX as a tool for regional leadership in Latin America. Each nation’s individual ambition to become a financial hub creates a “maze of ambitions” that could dent progress toward a unified BRICS Pay system. There is an inherent tension between building a collective, BRICS-branded alternative and advancing one’s own national financial ecosystem.

Furthermore, geopolitical rivalries, particularly between India and China, cast a shadow over the project. India’s reluctance to join China’s CIPS or Russia’s SPFS is a clear indicator of this. For New Delhi, ceding ground to a Chinese-dominated financial messaging system is as unpalatable as remaining entirely dependent on a Western one. The success of BRICS Pay, therefore, depends on the ability to design a governance model that balances these competing interests and prevents any single country from dominating the platform.

The Geopolitical Accelerant: A Forcing Function for Unity

Paradoxically, the very thing that threatens the BRICS project—external pressure—may also be the key to its ultimate realization. The article suggests that “Mr. Trump’s aggressive intent, particularly against members of the groupings, could force them into a political understanding towards launching their payment system, sooner than expected.”

The threat of secondary sanctions, trade tariffs, or other financial penalties from a hostile U.S. administration could act as a powerful forcing function. It would elevate BRICS Pay from a matter of financial convenience to one of strategic necessity. Faced with a common external threat, the individual members may find the political will to subordinate their competing ambitions to the collective need for a secure financial channel. The inclusion of Iran in 2024 is a case in point; it signals a grouping willing to integrate a heavily sanctioned nation, thereby reinforcing the need for a sanctions-proof payment system.

Conclusion: An Unfolding Financial Re-Alignment

The BRICS Pay initiative is more than a technical project; it is a symbol of a fragmenting global order. It represents a determined push towards a multipolar financial world where alternatives to the dollar and SWIFT not only exist but are actively promoted by a coalition representing a significant portion of the world’s population, GDP, and natural resources.

Its success is not guaranteed. The technical and political hurdles are immense, and the inertia of the incumbent system is powerful. However, even a partially successful BRICS Pay would have profound implications. It would create a parallel financial universe for trade within the Global South, reduce the efficacy of dollar-based sanctions, and grant its members a greater degree of policy autonomy. Whether it remains a niche network for sanctioned trade or evolves into a genuine global competitor to SWIFT will depend on the group’s ability to forge a common purpose out of its disparate national interests. In the new Great Game of international finance, BRICS Pay is the most potent piece yet played by the challengers.

Q&A: Unpacking the BRICS Challenge to the Financial System

1. What is the primary motivation behind the BRICS Pay initiative?

The primary motivation is twofold. First, it is driven by a desire for greater financial sovereignty, allowing BRICS nations to conduct international trade and finance without operating entirely within a system controlled by Western powers (the G10 central banks). Second, it aims to provide reduced exposure to U.S. and European sanctions. The experience of Russia after the 2014 annexation of Crimea, and the inclusion of long-sanctioned Iran in the grouping, has made creating a protected financial channel a strategic priority.

2. How does the 2014 Fortaleza Summit relate to the current BRICS Pay project?

The Fortaleza Summit was the foundational moment for the BRICS financial challenge. It led to the creation of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). These institutions demonstrated the group’s capacity to create alternatives to Western-dominated bodies like the World Bank and IMF. BRICS Pay is the logical next step, moving from building development and lending institutions to challenging the very payment and messaging infrastructure that underpins global finance.

3. What existing national systems will form the foundation of BRICS Pay?

The initiative plans to leverage the sophisticated payment systems already developed by its key members:

• Russia: The System for Transfer of Financial Messages (SFPS), a SWIFT alternative.

• China: The Cross-Border Interbank Payment System (CIPS), which facilitates RMB settlements.

• India: The Unified Payments Interface (UPI), a highly successful real-time payments system.

• Brazil: The PIX system, an instant payment platform operated by the central bank.
  BRICS Pay’s goal is to make these systems interoperable.

4. What is the biggest internal challenge facing the BRICS Pay project?

The biggest challenge is navigating the competing national ambitions of its members. While united in their broad goal, each major power (especially India and China) is simultaneously trying to promote its own payment system as a global or regional standard. This creates a tension between collective action and individual ambition. Furthermore, geopolitical rivalries, particularly the distrust between India and China, complicate the creation of a unified, trusted governance model for the shared network.

5. How could external geopolitical factors actually accelerate the launch of BRICS Pay?

The article suggests that aggressive posturing from a U.S. administration, such as the threats issued by then-President-elect Donald Trump, could act as a forcing function. If the BRICS nations face a common and immediate external threat, such as the risk of widespread secondary sanctions or trade wars, their strategic need for a sanctions-proof payment system would skyrocket. This shared vulnerability could override their individual hesitations and rivalries, compelling them to find a political compromise and launch BRICS Pay “sooner than expected” as a matter of collective security.