Malhotra Names UPI as BRICS Cross-Border Standard: CBDC Settlement Arm Cannot Be Politically Neutral
India's Reserve Bank of India Governor Sanjay Malhotra highlights UPI's efficiency as a model for BRICS cross-border payments, emphasizing that CBDC-based systems face governance challenges due to political neutrality concerns.Summary
India's Reserve Bank of India Governor Sanjay Malhotra announced that UPI's real-time, low-cost domestic payment system should serve as the benchmark for BRICS cross-border remittances. He outlined two tracks for BRICS payment reform: a bilateral fast payment system (FPS) linkage, which leverages existing infrastructure like UPI and Singapore's PayNow, and a CBDC-based settlement system requiring a shared multilateral platform. The FPS approach avoids centralized governance, while the CBDC track raises sovereignty concerns, particularly given China's potential dominance in such a system. Malhotra noted that India's bilateral efforts to promote local-currency settlements, including MoUs with Gulf nations, offer a faster path to reducing dollar dependence. The article underscores the urgency of lowering remittance costs, which currently average 6.36% globally, far above the UN's 3% target. While UPI processes billions of transactions daily at near-zero cost, cross-border transfers remain slow and expensive due to correspondent banking intermediaries. The BRICS task force is still in the discussion phase, with the 2026 summit in New Delhi expected to determine whether the dual-track approach will advance to a formal mandate.
(Source：Techtimes)