BRICS Payment Push Brings UAE Digital Dirham Into Cross-Border Debate

BRICS leaders want faster, cheaper payments using national currencies, but linking central-bank digital currencies remains an early proposal facing significant technical and political barriers.

The UAE could become an important testing ground for a more connected system of digital cross-border payments after BRICS leaders backed greater interoperability between member countries’ financial infrastructure.

The New Delhi Declaration, adopted at the BRICS summit on September 12, called for wider use of national currencies in trade and investment and continued work on faster, cheaper, more accessible and transparent international payments.

India has separately proposed connecting central-bank digital currencies, or CBDCs, across BRICS markets. Such a network could eventually allow businesses to make direct digital payments between currencies such as the UAE dirham and Indian rupee without relying on the full chain of correspondent banks used in many conventional transactions.

The distinction matters: BRICS has endorsed further work on payment-system interoperability, but it has not approved or launched a common digital-currency network. India’s CBDC-linking proposal remains under discussion.

For the UAE, the initiative arrives as the Central Bank develops the Digital Dirham and modernises domestic payments. Dubai’s position as a trade, tourism and financial centre gives the country a strong commercial reason to explore more efficient settlement with major partners such as India and China.

BRICS chooses connection over a common currency

The latest BRICS position is more practical than earlier discussion of creating a shared currency capable of challenging the US dollar.

Rather than issuing one supranational unit, members are examining ways to connect existing national payment systems and increase settlement in their own currencies. Each central bank would retain control over its currency, monetary policy and domestic financial infrastructure.

Finance ministers and central-bank governors asked the BRICS Payment Task Force to pursue practical cross-border solutions that are “fast, low-cost, more accessible, efficient, transparent, and safe”.

A connected system could reduce the number of intermediaries involved in a transaction. A UAE importer paying an Indian supplier, for example, may currently depend on commercial banks, foreign-exchange providers and correspondent institutions operating across several jurisdictions.

A digital or interoperable system could potentially complete parts of that process more quickly. It may also extend settlement beyond traditional banking hours and provide both parties with faster confirmation of payment.

These benefits remain objectives, however. BRICS has not published a common operating model, technical standard, implementation date or consumer-access framework.

Why the UAE has a strong use case

The UAE joined BRICS at the beginning of 2024 and has extensive trade relationships with several members.

India is one of the UAE’s largest commercial partners, supported by the Comprehensive Economic Partnership Agreement that took effect in 2022. The two countries have already explored local-currency settlement and payment connectivity, giving them a stronger foundation than exists across the entire BRICS group.

Dubai could benefit directly from lower-friction payments because its economy handles large volumes of trade, travel, remittances and financial services. Importers regularly pay suppliers across Asia, while expatriate workers transfer money to their home countries.

Even a modest reduction in foreign-exchange spreads, processing charges or settlement time could be meaningful for companies making frequent payments. Small businesses may benefit most because they usually have less negotiating power with banks and payment providers than multinational corporations.

The opportunity also extends to capital markets. DIFC-based financial institutions could provide liquidity, compliance services, currency conversion and transaction monitoring for new payment corridors.

CBDCs should not be confused with cryptocurrencies such as Bitcoin or privately issued stablecoins. A CBDC represents a direct form of sovereign currency created by a central bank, although its precise legal and operational structure depends on the issuing country.

Digital Dirham could provide UAE infrastructure

The Central Bank’s Digital Dirham programme forms part of the UAE’s Financial Infrastructure Transformation initiative.

Its potential uses include retail payments, wholesale financial settlement and cross-border transactions. Unlike a speculative crypto asset, a Digital Dirham would carry the value of the national currency and operate within a central-bank-governed system.

That could give the UAE a credible platform for bilateral experiments. Instead of waiting for all BRICS members to agree on one network, the country could develop connections with selected markets that have compatible regulations and sufficiently advanced digital-currency projects.

This incremental model is more likely than the immediate creation of a bloc-wide system. Countries can test limited payment corridors, define participation rules and assess cybersecurity risks before allowing wider use.

The UAE’s currency arrangement introduces another consideration. The dirham is pegged to the US dollar, meaning greater use of the UAE currency in trade would not necessarily represent a direct attempt to weaken the dollar.

For UAE businesses, the more immediate objective is likely to be efficiency: lowering conversion costs, improving payment speed and reducing dependence on lengthy correspondent-banking chains.

Political differences complicate the proposal

BRICS includes economies with different strategic relationships, sanctions exposure, capital controls and approaches to financial privacy.

Reuters reported that tensions between individual members could make deep financial integration difficult. Connecting central-bank infrastructure requires a degree of trust because participating countries must agree on technical access, settlement finality, data handling and procedures for resolving failed or disputed transactions.

Sanctions create an especially sensitive issue. Some BRICS members face extensive Western restrictions, while the UAE maintains close financial, investment and security relationships with the United States and Europe.

A system that appears designed to help sanctioned parties bypass controls could expose participating banks to serious compliance and reputational risks. UAE regulators would therefore need to ensure that any connection preserves anti-money-laundering screening, sanctions compliance and transaction traceability.

Currency imbalances pose another problem. If trade between two countries consistently runs in one direction, one participant may accumulate more of the other’s currency than it needs. Swap arrangements or reliable foreign-exchange markets would be required to manage those balances.

These are financial-policy questions, not problems that blockchain or another technical system can solve by itself.

Banks will remain central to adoption

A more connected BRICS payment system would not necessarily remove banks from international transactions.

Commercial institutions would still provide customer verification, trade finance, working capital, currency conversion and fraud monitoring. They may also operate the wallets or interfaces through which businesses access central-bank digital money.

The competitive pressure would fall on revenue generated from slow or opaque payment chains. Banks and exchange houses may need to offer faster settlement, clearer pricing and more integrated services if central-bank infrastructure lowers the cost of moving money.

Fintech companies could build invoicing, treasury and reconciliation tools on top of new payment connections. However, access would depend on licensing rules and whether central banks permit private companies to interact directly with the underlying systems.

Privacy will also influence adoption. Companies need protection for commercially sensitive transactions, while regulators require enough visibility to detect fraud and illicit finance. A poorly designed system could either expose too much customer information or make enforcement unnecessarily difficult.

A direction of travel, not a finished network

The BRICS declaration confirms political interest in reducing cross-border payment friction and expanding the role of national currencies. It does not establish a new currency, operational CBDC network or alternative global financial system.

For the UAE, that limited commitment still matters. The country has modern payment infrastructure, a developing Digital Dirham and large trade flows with other BRICS economies. It is well positioned to participate in carefully controlled bilateral connections.

The next meaningful development would be a named pilot involving specific central banks, banks and payment corridors. Regulators would then need to disclose the settlement model, technical standards, compliance controls and treatment of transaction data.

Until those details emerge, the BRICS initiative should be viewed as a policy direction. Its success will depend less on summit language than on whether participating countries can make their systems work together without weakening financial safeguards.

Fact-check and sources

• BRICS New Delhi Declaration — India’s Ministry of External Affairs 

• Reuters: BRICS adopts New Delhi Declaration 

• Central Bank of the UAE: Financial Infrastructure Transformation Programme — Primary background source for the UAE’s Digital Dirham and payment-modernisation programme.