Russia
Source: mid.ru

Ladies and gentlemen,
I would like to express my gratitude to a colleague and long-standing acquaintance of mine Khalilur Rahman who is Minister of Foreign Affairs of Bangladesh and President of the forthcoming 81st session of the UN General Assembly, a post to which he was elected several days ago. Following his election as President, his first foreign visit was to the Russian Federation, which I greatly appreciate, especially since his and my service at the UN overlapped in the 1980s and later when we worked together as members of our respective national delegations.
Also notable is the fact that this is the first ministerial-level meeting since the new government of Bangladesh has been formed following the parliamentary elections in February.
Bangladesh is a long-standing partner of Russia in South Asia. Relations between our countries were established more than half a century ago. January 2027 will mark their 55th anniversary. We have agreed to celebrate this anniversary in a manner befitting its significance. Our relations are steeped in traditions of friendship, mutual assistance, and non-interference in one another’s internal affairs, as well as equality.
We maintained constructive political dialogue throughout almost entire history of our relations. This time, we focused on trade and economic ties.
Bangladesh is second only to India as our trade partner in South Asia. Even though trade experienced minor ups and downs in recent years, it has never fallen below $2 billion which is an impressive figure. We agreed that prospects were good for growing it even more.
The world needs a more reliable payment system if we want to expand trade under current geopolitical circumstances when trade, economic, and investment relations as well as, indeed, all other relations between countries have come under illegal pressure from the West. We discussed this. We also agreed to work through substantively the full range of our economic ties as part of the Russia-Bangladesh Intergovernmental Commission on Trade, Economic, and Scientific and Technical Cooperation, which will meet for the fifth time this year. We will prepare thoroughly for it.
Energy remains the key area of bilateral cooperation. The construction of the Rooppur nuclear power plant is our largest joint project. The ceremony for physical launch of its first power unit took place on April 28. Rosatom CEO Alexey Likhachev attended the ceremony. Today, Foreign Minister Rahman will hold a separate meeting with him. More meetings have been planned, including meetings with First Deputy Chairman of the Executive Board of Sberbank Alexander Vedyakhin and Deputy Speaker of the Federation Council Konstantin Kosachev.
Both sides have a stake in stepping up interparliamentary contacts through friendship groups and otherwise. Such a group already operates on our side, and our Bangladeshi friends will put one in place as well.
In addition to Rosatom and Sberbank, other Russian companies are interested in pursuing new cooperation projects as well. Interest is also shown by Lukoil, Rosneft, Gazprom International Limited, and Novatek.
It also came to our attention that our Bangladeshi colleagues are interested in making wider use of the opportunities provided by international platforms hosted by the Russian Federation. For example, the Bangladeshi delegation took a constructive part in the recently concluded St Petersburg International Economic Forum. We hope our Bangladeshi friends will take part in the Eastern Economic Forum in Vladivostok in September as well.
We agreed to take stock of our legal treaty framework. Numerous draft agreements have been under consideration for quite a while. We also agreed to have our deputies and legal experts engage actively on this issue. This will contribute to reinforcing the foundation of our relations across all areas, including between our respective foreign ministries.
We agreed to step up regular consultations on key matters of regional and international politics between our foreign ministries’ designated departments.
We discussed the regional and global agenda, including immediate and long-term consequences of American-Israeli aggression against Iran and its negative impact on energy security of many countries, including Bangladesh. UN-related issues also came under discussion, since Foreign Minister Khalilur Rahman will start chairing the 81st session of the General Assembly in September.
We appreciate our Bangladeshi friends’ balanced and objective position with regard to the situation in and around Ukraine. I briefed Minister Rahman on our assessment of the most recent developments in this area. In turn, Mr Rahman shared his assessments of the exceedingly acute issue of more than one million Rohingya refugees from neighbouring Myanmar residing in Bangladesh. Russia’s stance on this issue is well known and we reiterated it. This issue needs to be resolved bilaterally between Bangladesh and Myanmar. External forces should not stand in the way of this process, but should instead encourage both sides to come to terms. What we’ve seen so far is a number of external actors actively trying to support and provide weapons to anti-government forces that are using extremist methods to oppose the Myanmar government.
Overall, we are satisfied with the discussion. I hope we will see each other again soon during the 81st session of the UN General Assembly. I sincerely thank Minister Khalilur Rahman for cooperation.
Question: How likely is the resumption of talks with Ukraine in light of recent events, including the terrorist attacks against civilians in Starobelsk and the attacks on Zaporozhskaya Nuclear Power Plant? Is the United States still part of the efforts to achieve a political settlement?
Sergey Lavrov: Regarding the likelihood of seeing talks with Ukraine resume, or the Ukraine issue more broadly, President Putin addressed this issue in depth during the plenary session of the 29th St Petersburg International Economic Forum. He also commented on the extensive letter which Zelensky put out the day before. The letter was addressed to President Putin but, for reasons that are not entirely clear, was circulated worldwide. People with good manners do not normally do so. The President’s assessment of the letter was that Ukraine had no interest in negotiations.
We are ready and willing to talk, but talks must be honest and without tricks, unlike what occurred before the February 2014 coup. At that time, negotiations resulted in an agreement on a settlement, including the formation of a national unity government and the holding of early elections. Yet the very next morning, the opposition, in violation of the guarantees in the form of signatures of France, Germany, and Poland, carried out a coup and went after President Viktor Yanukovych, with whom they had signed the document guaranteed by the Europeans.
Incidentally, the current President of Germany, Frank-Walter Steinmeier, was the German signatory. This provided a genuine opportunity to reach a negotiated settlement, and it was even presented as Europe’s success. However, that success lasted only until the next morning. Subsequently, Germany and France served as mediators in the Minsk process. The Minsk Agreements were concluded, but it later transpired that the document merely served as a smokescreen, including for the Europeans themselves. Several years ago, after leaving office, former German Chancellor Angela Merkel and former French President Francois Hollande openly admitted that no one had even intended to act on those agreements and that their sole purpose had been to buy time to flood Ukraine with weapons, so that it could do a better job killing Russians. That is precisely what the current regime continues to do today, using weapons, intelligence and satellite data provided by the West, without which the war against Russia would’ve been impossible.
We talked with the Ukrainian side in Istanbul in April 2022. At Ukraine’s own initiative, we agreed to its proposed approach and initialled the principles that were to form the basis of a final settlement agreement. President Putin likewise noted during his speech at the plenary session of the 29th St Petersburg International Economic Forum that the West, including President Macron and then British Prime Minister Boris Johnson, did everything possible to foil that agreement.
Speaking of the most recent negotiations, almost a year ago, in Anchorage, Alaska, in August 2025, President Putin - he made a point of it as well - accepted a very specific proposal put forward by President Trump in a spirit of compromise. That is how those talks ended.
I very much hope that previous failures, when the West refused to honour agreements it had itself supported, will not be repeated with regard to the understanding reached in Alaska. Unfortunately, however, our US partners have so far shown no interest in it.
President Putin recently reaffirmed, and this has been confirmed at other levels as well, that we remain prepared to be guided by the understandings clearly set out during the Anchorage summit on August 15, 2025.
What does concern us, however, is a statement made recently by State Secretary Marco Rubio, who conveyed during congressional hearings that the United States was not in a position to act as a mediator because it supported Ukraine. Similar remarks were made by notorious Kaja Kallas and by a number of other EU and EC figures. This is why I find it difficult to comment on prospects for negotiations.
The word I’m getting is that - I believe it was yesterday - the leaders of UK, France, and Germany, together with Zelensky, signed in London a document on the strategic support for the current regime and on preparations for the deployment of “stabilisation forces” - in other words, occupation forces - on whatever territory remains of Ukraine after the conflict comes to an end. They also reportedly agreed to provide Ukraine with additional long-range weapons to attack Russian territory, including targets deep inside our country. Against such a backdrop, I do not see how one can even mention negotiations. Everyone should probably take seriously what President Putin said in response to questions during the plenary session of the 29th St Petersburg International Economic Forum: everything now depends not on negotiations but on what our frontline heroes are doing.
Question: Reportedly, former President of Chile and candidate for the post of UN Secretary-General Michelle Bachelet may soon come to Moscow on a visit. We wonder whether Moscow has a preferred candidate for the post of Secretary-General. What is our position on the idea that this post could be held by a woman for the first time in history?
To follow up on that, how do we see a fair and balanced organisation of a new UN Secretariat? Will we push for reforming the Secretariat?
Sergey Lavrov: You don’t expect me to share our preferences, do you? You are asking whether Moscow has preferences. This is, after all, a working matter. It’s a diplomatic process.
We want the Secretary-General to fully meet the requirements set out in the UN Charter, namely, impartiality and categorical refusal and unacceptability of receiving instructions from any Member State and, in general, the implementation of the tasks set out in the UN Charter understood as an indivisible and interdependent whole rather than a set of isolated provisions. Unfortunately, the Secretary-General in office, whom I know very well and have known for a long time, and who has worked extensively within the Organisation, does not meet these requirements. He openly sides with the West on the Ukrainian issue among other matters.
Let me give you an example we have mentioned during the talks. Public statements by the Secretary-General and his staff on Ukraine have consistently come down to underscoring the importance of complying with the UN Charter and respecting the principle of Ukraine’s territorial integrity. When I confronted him on how we are supposed to reconcile this with the other principles of the UN Charter beyond territorial integrity, in particular the principle of the self-determination of peoples, he said that it was beside the point.
Notably, when US President Donald Trump suddenly mentioned Greenland, and at a news conference the spokesperson of the UN Secretary-General was asked how the UN leadership viewed the US claim to the island, the answer was quite interesting and quite different from answers given to questions about Ukraine. The Secretary-General’s spokesperson said that in the case of Greenland, they believed one should be guided by international law, the UN Charter, the territorial integrity of Denmark, and the right of the Greenlandic people to self-determination.
For obvious reasons, we immediately asked the Secretary-General why self-determination in relation to the Greenlandic people was readily recognised, whereas in relation to those who rejected the results of the bloody coup in Ukraine in 2014, such recognition doesn’t exist. The answer they gave was in line with the current Secretariat leadership that “this is a different matter.” This is what the West keeps telling us every time we catch it in the act or, as the saying goes, with its hand in the cookie jar.
The Secretariat reform is necessary. We have already advocated the reform at the Security Council and at the General Assembly (including in my statements at the most recent 80th session). At present, the leadership of the Secretariat is Western-dominated, or to be more precise, NATO-dominated. The UN Charter contains only one criterion for staffing the Secretariat which is equitable geographical representation to make sure all regions and all countries are represented proportionally.
Decades ago, outside the UN Charter framework (largely on the initiative of our Western colleagues), additional criteria were adopted, such as population size, GDP, per capita income, and industrial output. As a result, quotas in the Secretariat were distributed in such a way that Western countries ended up with the majority, as they were far more developed, with higher GDP and industrial output, and so on. This is not to say that other countries were taken out of the equation altogether, no. All countries are more or less represented at the UN Secretariat. They occupy either mid-level quotas, or somewhat higher or lower positions, and this state of affairs needs to be balanced.
But this is not the point. One must focus on the positions that truly represent the UN authority: the leadership of the Secretariat and the leadership of departments through which the bulk of the UN budget flows. There are several such posts: the Secretary-General himself is from Portugal, a NATO country; his First Deputy is a lady from Nigeria, but also a subject of the United Kingdom, meaning NATO; the Under-Secretary-General for Political Affairs is also a British subject; the Under-Secretary-General for Peace Operations is a French person, NATO; the Under-Secretary-General for Humanitarian Affairs is British, NATO; the Under-Secretary-General in charge of system-wide security, including the safety of personnel, agencies, buildings and premises is a Canadian, someone from a NATO member country. Recently, a new Under-Secretary-General in charge of advancing UN reform under the Secretary-General’s UN80 initiative’ report was appointed. As luck would have it, he is also British.
Here you have a group of seven individuals who control the key transmission belts of the entire UN system. This is not acceptable.
I will close with what you asked at the beginning: Michelle Bachelet is now in Moscow. We will have a meeting in a few hours. And we have absolutely nothing against women heading this organisation, or any other organisation, for that matter.
Question: Bangladesh said it was willing to join BRICS back in 2023. It is already a member of the New Development Bank. Was Bangladesh joining the group discussed today? How will BRICS benefit from such accession?
Sergey Lavrov: The benefits of joining BRICS are obvious. A large number of countries, many more that the number of current members, wish to benefit from these advantages. We are fully aware of the considerations that drive the applicants, including our friends from Bangladesh, who are already the New Development Bank shareholders and are quite happy with their status.
Today, we discussed that the Bank should gradually move away from discredited global reserve currencies (the US dollar and the euro) and rely more on developing new independent platforms and settlement mechanisms that are free from Western pressure and sanctions, as well as supply systems that are not exposed to the daily risk of sanctions. This work is gradually progressing, and we expect tangible progress in the foreseeable future.
As for BRICS, its ten members have reached an understanding that we need to put the admission of new members on hold. Two years ago, the number of BRICS members doubled from five to ten. We now need time for BRICS to settle in the new format.
When this pause comes to an end, we will look favourably upon the candidacy of Bangladesh which is a large and important Asian country.

Netherlands
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Abstract

This study evaluates how BRICS financial cooperation—specifically through the New Development Bank (NDB) and Contingent Reserve Arrangement (CRA)—impacts exchange rate stability. Utilizing a multi-period difference-in-differences (DID) framework on 99 countries from 2004 to 2024, we find that institutionalized cooperation significantly reduces realized exchange rate volatility. This stabilizing effect operates by optimizing domestic credit structures to mitigate “original sin” and attracting resilient foreign direct investment (FDI). Furthermore, the policy's efficacy is amplified by robust foreign reserves and political stability, yet attenuated by high domestic inflation. These results underscore the importance of non-Western financial safety nets in enhancing the macroeconomic resilience of emerging markets against global financial cycle shocks.

1. Introduction

In the contemporary global financial landscape, emerging market economies (EMEs) grapple with a fundamental “Dilemma” rather than the classic “Trilemma.” The dominance of the global financial cycle implies that domestic monetary conditions in EMEs are disproportionately sensitive to U.S. monetary policy shifts, regardless of their exchange rate regimes (Miranda-Agrippino and Rey, 2020). This dependence on a dollar-centric architecture exposes member states to heightened exchange rate fluctuations and speculative capital outflows (McLeay & Tenreyro, 2025). In response, the BRICS nations (Brazil, Russia, India, China, and South Africa) have accelerated a “de-dollarization” agenda, establishing institutional buffers such as the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) to foster a more resilient financial framework.
Existing research on the macroeconomic stability of emerging market economies (EMEs) has primarily developed along three distinct trajectories. First, a substantial body of work explores the systemic vulnerabilities imposed by the “Global Financial Cycle” and the pervasive hegemony of the US dollar (Obstfeld & Zhou, 2022). These studies, exemplified by the “Dilemma, not Trilemma” hypothesis, argue that U.S. monetary policy shifts are the primary drivers of cross-border capital flows and exchange rate fluctuations in EMEs, effectively decoupling domestic monetary conditions from local fundamentals (Luo et al., 2025). Second, extensive research has addressed the micro-structural vulnerabilities of emerging markets, particularly the phenomenon of “Original Sin"—the inability of these nations to borrow abroad in their own currencies (Onen et al., 2025). Scholars in this vein emphasize how currency mismatches on national balance sheets trigger valuation effects, where currency depreciation exacerbates debt burdens and further destabilizes the exchange rate (Allen & Juvenal, 2025). Third, while a nascent literature has begun to examine South-South cooperation, it remains heavily bifurcated: focusing either on the trade-related dimensions of de-dollarization (Quintana, 2025a) or offering qualitative assessments of the institutional mandates of the New Development Bank (NDB) (Collins, 2025). Consequently, empirical evidence quantifying the direct macroeconomic stabilizing potential of collective institutional frameworks like the NDB and the Contingent Reserve Arrangement (CRA) remains conspicuously absent.
Against this backdrop, this paper addresses a pivotal empirical void by providing a systematic evaluation of whether and how institutionalized financial cooperation within the BRICS framework stabilizes member states’ currencies. Given the intensifying fragmentation of the international monetary system, quantifying the efficacy of non-Western financial safety nets is of profound importance for emerging markets seeking to mitigate the inherent pro-cyclicality of the dollar cycle. We investigate the effect of BRICS financial cooperation—proxied by the operationalization of the NDB and CRA—on realized exchange rate volatility. Specifically, we explore whether the promotion of local currency settlements and the provision of liquidity support successfully mitigate the spillover effects of the global financial cycle.
By identifying the underlying transmission channels and domestic boundary conditions, this study offers critical insights into the design of collective institutional arrangements aimed at enhancing macroeconomic resilience. The importance of this research is further underscored by the recent 2024 expansion of the BRICS, which presents a unique natural experiment to test the scalability of de-dollarization initiatives in an increasingly multipolar financial world. In doing so, we go beyond qualitative assertions to provide a rigorous, evidence-based assessment of how South-South cooperation functions as an anchor for exchange rate stability.

2. Theoretical analysis and research hypotheses

2.1. The multidimensionality of de-dollarization: transactional, financial, and institutional perspectives

In the contemporary global financial landscape, the concept of “de-dollarization” has evolved from a mere political aspiration into a multifaceted macroeconomic strategy aimed at mitigating the systemic vulnerabilities imposed by the hegemony of the US dollar (Gerding & Hartley, 2024; Pforr et al., 2025; Quintana, 2025). To rigorously evaluate its impact on exchange rate stability, it is essential to define de-dollarization across three distinct but interrelated dimensions: the transactional level, the financial level, and the institutional level. While the existing literature often conflates these aspects, this study delineates them to clarify the specific transmission pathways through which BRICS cooperation operates.
At the transactional level, de-dollarization refers to the reduction of the US dollar's role as a medium of exchange and a unit of account in international trade. This is primarily manifested through the promotion of local currency settlements (LCS) and the establishment of bilateral currency swap lines among member states. By bypassing the dollar-centric clearing systems, countries can reduce transaction costs and mitigate the direct exchange rate risks associated with intermediary currency conversions. Although this study acknowledges the trade-related dimensions of de-dollarization as a foundational component of South-South cooperation, the transactional level serves more as a facilitator rather than the primary driver of medium-term exchange rate stability. Instead, this paper posits that the stabilizing potential of de-dollarization is most effectively realized when it moves beyond simple trade settlement into the deeper structural domains of finance and institutional governance.
Consequently, this research focuses predominantly on the financial and institutional levels of de-dollarization. At the financial level, the focus shifts to the optimization of national balance sheets and the mitigation of “original sin"—the persistent inability of emerging market economies (EMEs) to borrow abroad in their domestic currencies. Financial de-dollarization involves deepening local currency bond markets and increasing the proportion of domestic credit within the total debt portfolio. This structural shift is critical because it reduces the “valuation effect,” where fluctuations in the value of the US dollar trigger automatic changes in the real value of external debt, often leading to pro-cyclical volatility and financial distress. At the institutional level, de-dollarization is embodied by the creation of non-Western financial safety nets, such as the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). These institutions provide collective buffers and liquidity supports that decouple member states from the inherent pro-cyclicality of the global financial cycle, thereby fostering a more resilient financial framework that is less dependent on the discretionary policy shifts of the Federal Reserve.

2.2. Financial cooperation and exchange rate volatility

The theoretical foundation of BRICS financial cooperation is rooted in the strategic neutralization of the “Global Financial Cycle,” a phenomenon that systematically erodes the monetary autonomy of emerging market economies (EMEs) (Miranda-Agrippino & Rey, 2020a). According to the “Dilemma, not Trilemma” view, the US dollar's (USD) role as the global numeraire subjects EMEs to the Federal Reserve's policy shocks, creating a spillover mechanism where domestic economic fundamentals are often overwhelmed by exogenous liquidity shifts (Lastauskas and Nguyen, 2024). This structural vulnerability arises because the USD-centric financial architecture forces EMEs to act as “price takers” in global capital markets, where any tightening of US monetary policy triggers a mechanical reversal of capital flows and an expansion of risk spreads (Lastauskas and Nguyen, 2024; Faia et al., 2025). By developing an alternative financial infrastructure—specifically through the New Development Bank (NDB) and the promotion of local currency settlement—BRICS nations are not merely seeking political alignment but are engaging in a structural decoupling (Hofman & Srinivas, 2024). This process formally reduces the “beta” of member currencies by diversifying the denomination of trade and debt, thereby weakening the sensitivity of domestic exchange rates to the dollar-driven global risk appetite (Georgiadis & Jarociński, 2025).
The causal link between institutional cooperation and reduced volatility is further formalized through the mitigation of the “Original Sin” and the subsequent reduction in liquidity risk premiums (Eichengreen et al., 2023; Apeti et al., 2024; De Paula et al., 2025). The establishment of the Contingent Reserve Arrangement (CRA) provides a credible, non-Western liquidity backstop that fundamentally alters the payoff matrix for speculative actors (Aizenman et al., 2021). In a unipolar system, the absence of a lender-of-last-resort often necessitates aggressive, high-interest rate defenses of the currency during periods of global stress, which paradoxically signals fragility and invites further speculative attacks (You et al., 2023). However, the CRA acts as a pre-emptive stabilizing force; by signaling a collective commitment to mutual defense, it reduces the probability of “sudden stops” and lowers the risk premium required by international investors. Furthermore, the expansion of local currency settlement systems bypasses the traditional demand for USD in trade invoicing, effectively insulating the domestic exchange rate from the idiosyncratic shocks of the US banking system. This institutionalized cooperation serves as a shock absorber that dampens the transmission of global financial stress into domestic market volatility by providing a reliable, alternative source of international liquidity.
Finally, beyond structural transformations, institutionalized cooperation functions as a high-frequency stabilizer through an immediate ‘Signaling Channel’ (Caballero & Gadanecz, 2024). Unlike the gradual evolution of credit markets, the formalization of the NDB and CRA acts as a preemptive signal that fundamentally recalibrates investor expectations. By signaling a collective commitment to mutual liquidity defense, the BRICS framework provides an instantaneous ‘anchoring effect’ that compresses speculative risk premiums and reduces the noise-to-signal ratio in exchange rate movements, even before long-term structural shifts in FDI or domestic credit materialize (Son, 2025). This shift in market sentiment is crucial; it reduces the noise-to-signal ratio in exchange rate movements by anchoring the domestic currency's value to the collective economic output of the bloc rather than the volatile fluctuations of a single reserve currency (McLeay & Tenreyro, 2026). This confidence manifests as lower risk premiums and reduced idiosyncratic volatility, as the “institutional density” of the BRICS framework—comprising the NDB, the CRA, and shared payment systems—acts as a counter-cyclical buffer (Caporin et al., 2024.; Di Casola et al., 2025). Consequently, as financial integration deepens, the collective strength of the bloc provides a stabilizing framework that compensates for the inherent fragility of individual EME currencies, leading to a sustained reduction in realized volatility. This theoretical framework suggests that the transition toward a multipolar financial system is a necessary condition for EMEs to reclaim the stability required for sustainable domestic growth.

BRICS financial cooperation significantly reduces exchange rate volatility in member countries.

2.3. Transmission mechanisms: credit structure and foreign direct investment

The stabilizing effect of de-dollarization is expected to operate through two primary channels: the optimization of internal credit structures and the stabilization of the capital account via Foreign Direct Investment (FDI). These mechanisms represent the structural transformation of the national balance sheet, moving it away from a state of external dependence toward internal robustness.
First, the Local Credit Channel addresses a fundamental vulnerability of EMEs known as “Original Sin"—the persistent inability of these nations to borrow abroad in their own domestic currencies. This structural deficiency forces countries to accumulate dollar-denominated debt, creating a mismatch between the currency of their revenues (domestic) and the currency of their liabilities (USD). BRICS cooperation encourages the development of local currency bond markets and increases the proportion of domestic credit within the total debt portfolio by providing the technical and institutional framework necessary for sovereign and corporate local issuance (Park & Shin, 2025). As the Local Credit Ratio rises, the “valuation effect” of USD fluctuations on national balance sheets diminishes (Allen & Juvenal, 2025; Eugeni, 2024). When a domestic currency depreciates, a dollar-heavy debt load increases in real terms, often triggering a “vicious cycle” of deleveraging and further currency collapse. By shifting the credit structure toward domestic denominations, BRICS cooperation breaks this pro-cyclicality, ensuring that currency fluctuations do not automatically translate into solvency crises or systemic financial distress. This endogenous stability allows the exchange rate to function as a shock absorber rather than a shock amplifier.
Second, the Investment Attraction Channel focuses on the qualitative composition of the capital account. De-dollarization initiatives often include bilateral swap lines and investment facilitation agreements that streamline the flow of capital between member states without the need for intermediary conversions (Quintana, 2025). These mechanisms reduce transaction costs and mitigate the hedging expenses associated with exchange rate risks for cross-border investors. By fostering a more predictable and institutionally supported financial environment, BRICS cooperation attracts Foreign Direct Investment (FDI)—which is characterized by long-term commitment, physical asset ownership, and significantly lower volatility compared to the “hot money” typical of portfolio equity and debt flows (Holmes Jr et al., 2025). A steady influx of FDI provides a stable source of foreign exchange demand that is rooted in real economic activity rather than speculative sentiment. This shift from volatile capital flows to stable investment serves to anchor the exchange rate, as FDI is less likely to exit the country at the first sign of global market turbulence. Thus, the transition from dollar-dependence to a localized credit and investment framework creates a dual-layer defense against exchange rate instability.


Financial cooperation mitigates exchange rate volatility by increasing the proportion of local currency credit in the domestic economy.

Financial cooperation stabilizes exchange rates by attracting Foreign Direct Investment (FDI).

2.4. Moderating effects of macroeconomic and institutional factors

The efficacy of BRICS financial cooperation is not uniform but is contingent upon the prevailing macroeconomic environment and the institutional quality of the member states. The interaction between international cooperation and domestic conditions determines the “marginal utility” of the BRICS framework in achieving currency stability.
The role of Foreign Exchange Reserves is particularly critical in this moderating framework. Traditional economic theory suggests that reserves act as a self-insurance mechanism, allowing central banks to intervene directly in FX markets to smooth volatility (Aizenman et al., 2024; Lutz & Zessner-Spitzenberg, 2023). We posit that BRICS financial cooperation and foreign reserves may exhibit a “substitutive” relationship rather than a purely additive one. For countries with scarce reserves, the institutional support provided by the BRICS—specifically the liquidity facilities of the CRA—offers a more critical and transformative backstop. In contrast, for reserve-rich nations, the relative benefit of collective cooperation may be marginalized by their existing ability to self-insure. Thus, the stabilizing effect of cooperation is expected to be more pronounced in environments where traditional buffers are lacking.
Furthermore, the implementation of de-dollarization policies requires high levels of policy credibility and administrative efficiency, encapsulated in the concept of Political Stability. In countries with greater political stability, the government's commitment to local currency internationalization and financial reform is perceived as a long-term strategic shift rather than a temporary populist maneuver (Quintana, 2025). Such credibility is essential for convincing market participants to hold and trade in local currencies. Consequently, political stability acts as a catalyst, amplifying the volatility-reducing benefits of financial cooperation by reducing the “political risk premium” that often plagues EME currencies. Conversely, in the absence of stability, the institutional gains from BRICS cooperation may be undermined by domestic uncertainty.
Finally, the Inflationary Environment (CPI) serves as a fundamental constraint on the success of de-dollarization. Domestic price stability is a prerequisite for currency credibility; it is the “store of value” function that makes a currency viable for international use. In hyper-inflationary environments, the local currency loses its utility as a reliable unit of account, leading to “hysteresis” where the public and investors continue to prefer the US dollar despite institutional efforts to the contrary. We expect that the stabilizing impact of BRICS cooperation is significantly attenuated in countries experiencing high CPI, as domestic monetary instability may override the systemic benefits of international coordination. Therefore, the success of the BRICS financial framework is inextricably linked to the internal macroeconomic discipline of its members.

The impact of financial cooperation on reducing FX volatility is moderated by national characteristics, being more effective in environments with lower reserves, higher political stability, and lower inflation.

3. Research design

3.1. Data sources

The primary dataset for this study is a comprehensive unbalanced panel spanning the BRICS nations (including the original members and the 2024 expansion cohort) and a control group of comparable emerging market economies. The sample covers the period 2004–2024, comprising 21 years and a total of 1875 country-year observations across 99 countries. Macroeconomic data, including official exchange rates, GDP, trade openness, and inflation, are retrieved from the World Bank's World Development Indicators (WDI). Data regarding external debt and domestic credit are sourced from the IMF's International Financial Statistics (IFS). Institutional quality metrics, specifically political stability, are derived from the Worldwide Governance Indicators (WGI). The final sample is cleaned of extreme outliers using 1% winsorization at both tails to ensure that the results are not driven by hyperinflationary episodes or idiosyncratic shocks.

3.2. Variable description3.2.1. Dependent variable: exchange rate volatility (FX vol)

The primary dependent variable is FX Vol, which serves as a proxy for the currency's susceptibility to external financial shocks. Following established econometric conventions in international finance, it is operationalized as the 3-year rolling standard deviation of the log-difference in the official exchange rate (local currency per USD). This specification is designed to capture structural medium-term volatility while effectively smoothing out high-frequency idiosyncratic noise that may arise from transitory market sentiment. To ensure the robustness of our findings across different volatility regimes, we additionally construct a Coefficient of Variation (FX CV) and extend the rolling window to a five-year specification (FX Vol. 5y).

3.2.2. Core independent variable: financial cooperation (FinCoop)

The central explanatory variable, FinCoop, is a Difference-in-Differences (DID) indicator that serves as a high-level proxy for the intensity of de-dollarization and institutional financial integration. This binary variable is assigned a value of 1 for the original BRICS members starting in 2015, the year signifying the formal operationalization of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). For the 2024 expansion cohort, the indicator activates in 2024. While direct metrics of de-dollarization—such as precise currency-specific trade settlement shares or internal central bank reserve compositions—are often shielded by national security confidentiality, the FinCoop indicator acts as a comprehensive proxy for the shift toward a multipolar financial architecture. This approach is superior in the current research context as it captures the “policy treatment” of entering a non-USD liquidity network, which transcends simple financial openness by specifically altering the institutional reliance on the Federal Reserve's swap lines. We utilize a one-year lagged term to mitigate potential endogeneity and to reflect the necessary gestation period for international financial frameworks to influence market behavior.

3.2.3. Mechanism & moderating variables

To formalize the causal story and address the “de-dollarization” mechanism more directly, we employ two sets of transmission and boundary variables. First, we utilize Credit and FDI as mediators. Credit (domestic-to-total credit ratio) serves as a proxy for the depth of local-currency financial markets; an increase in this ratio represents a functional de-dollarization of the domestic balance sheet, reducing the “Original Sin” of USD-debt dependence. FDI (net inflows as % of GDP) represents the substitution of volatile, USD-denominated “hot money” with long-term, resilient capital, reflecting a stabilized capital account under the BRICS institutional umbrella.
Second, we introduce moderating variables to define the boundary conditions of these effects. Reserves (total reserves to external debt) and PolStab (political stability) represent the external liquidity buffers and institutional credibility required to make de-dollarization efforts credible to international markets. Conversely, CPI proxies for internal monetary stability. Given that high-inflation environments often drive domestic actors toward “spontaneous dollarization,” the CPI variable allows us to test whether internal monetary mismanagement creates a credibility friction that attenuates the volatility-reducing benefits of the BRICS financial framework.

3.2.4. Control variables

To ensure the internal validity of the DID estimates, we control for a standard set of macroeconomic and institutional fundamentals that shape exchange-rate dynamics. Economic size and cyclical conditions are captured by ln(GDP) and GDP Growth. CPI is included to proxy price stability and purchasing-power-parity considerations, while Trade Open measures the degree of integration into global value chains. The Real Rate reflects the domestic monetary policy stance and interest-rate-parity conditions. Finally, PolStab accounts for the institutional risk premium associated with political stability, which can influence currency valuation through risk perceptions and capital flows.

3.3. Model construction

To evaluate the impact of BRICS financial cooperation on exchange rate stability and identify the underlying channels, we employ three econometric specifications. First, a multi-period Difference-in-Differences (DID) model identifies the baseline effect:Where i and t denote country and year indices;  is the intercept;  is the coefficient of interest;  represents the vector of parameters for control variables;  and  capture country and year fixed effects, respectively; and  is the idiosyncratic error term.
Second, we utilize a recursive system to test the mediation effects of Credit and FDI:Here,  represents the potential mediators. Mediation is confirmed if  and  are statistically significant, with a concomitant reduction in the magnitude or significance of  relative to .

Third, an interaction model evaluates how the policy effect is conditioned by national characteristics:Where Mod_it denotes the moderating variables (Reserves, PolStab, or CPI), and  captures the direction and magnitude of the moderation effect. All models employ country-level clustered standard errors to ensure robust statistical inference.

4. Empirical results analysis4.1. Baseline results analysis

Table 2 presents the baseline estimates of the impact of BRICS financial cooperation on exchange rate volatility. Column (1) reports the results including only the core treatment variable and fixed effects, while Column (2) incorporates a full set of macroeconomic and institutional control variables. In both specifications, the coefficient of FinCoop is negative and statistically significant at the 1% and 5% levels, respectively. Specifically, the results in Column (2) indicate that financial cooperation is associated with a 0.100 unit decrease in FX Vol. This finding provides strong empirical support for Hypothesis 1, suggesting that the institutionalization of BRICS financial cooperation—through mechanisms such as local currency settlement and liquidity support—effectively serves as a stabilizer for member states' currencies.

Notes: The dependent variable is FX Volatility. 'Fin. Coop.’ denotes the one-year lagged policy dummy. Country and Year FE are included. T-statistics in parentheses. The same note applies to all the following tables.

To further rule out the interference from regional synchronous shocks, we introduce Region × Year fixed effects in Columns (3) and (4). Constructed as the interaction between regional dummy variables (e.g., Latin America, East Asia) and year dummy variables, these fixed effects are designed to capture time-varying regional dynamics, such as commodity price cycles, regional financial crises, or synchronized monetary policy responses.Even after controlling for these intricate regional trends, the coefficient on FinCoop in Column (4) remains statistically significant at the 1% level and slightly increases in absolute value (−0.105). This confirms the robustness of our findings: the financial safety net of the BRICS countries, as a non-Western alternative, can effectively mitigate the negative spillovers of the global financial cycle on emerging markets.

4.2. Robustness tests

4.2.1. Parallel trend test

The validity of the multi-period Difference-in-Differences (DID) estimation hinges on the parallel trend assumption, which requires that the treatment and control groups exhibit similar trends in exchange rate volatility prior to the policy shock. To verify this, we conduct an event study analysis, with the results visualized in Fig. 1.
As illustrated, the estimated coefficients for the pre-treatment periods (t-5 to t-2) are statistically indistinguishable from zero, as their 95% confidence intervals encompass the horizontal axis. This lack of significance prior to the implementation of financial cooperation suggests that there were no systematic differences in the trajectory of FX Vol between the two groups, thereby satisfying the parallel trend requirement.
The event study results in Fig. 1 provide compelling evidence of the dual-speed transmission mechanism of de-dollarization. Specifically, the abrupt and statistically significant decline in the volatility coefficient at t+1 strongly validates the Signaling Effect hypothesized by Reviewers. Since structural reconfigurations—such as the deepening of local currency credit markets—are inherently path-dependent and ‘slow-moving,’ the immediate post-treatment rupture underscores that market participants responded to the institutional milestone itself. This suggests that the BRICS framework stabilizes currencies not only by altering economic fundamentals over time but also by providing an immediate psychological buffer against speculative pressure.This negative impact remains persistent and statistically significant through t+5, indicating that BRICS financial cooperation exerts a sustained stabilizing effect on the exchange rates of member nations. The structural break at t = 0 further confirms that the observed reduction in volatility is indeed driven by the policy shock rather than pre-existing trends or contemporaneous macroeconomic factors.

4.2.2. Placebo test

To further dismiss the possibility that our baseline results are driven by unobserved time-varying factors or coincidental shocks, we perform a rigorous placebo test by conducting 500 Monte Carlo simulations. In each iteration, we randomly assign “pseudo-treatment” status to five countries and designate a “pseudo-policy” year within the sample period, subsequently re-estimating the baseline specification. As illustrated in Fig. 2, the kernel density distribution of the estimated coefficients from these 500 permutations is centered remarkably close to zero, following a near-normal distribution. Furthermore, the vast majority of the pseudo-coefficients yield p-values well above the 10% significance threshold. In stark contrast, our actual estimated coefficient (−0.100) lies at the extreme left tail of the placebo distribution, representing a clear statistical outlier. This evidence effectively confirms that the observed stabilizing effect of BRICS financial cooperation on exchange rate volatility is not a product of random chance, but rather a robust causal consequence of the institutionalized policy intervention.

4.2.3. PSM—DID estimation

To address potential self-selection bias and ensure comparability between the treatment and control groups, we employ a PSM-DID framework. We utilize all baseline control variables as matching covariates to estimate propensity scores and implement 1:1 nearest-neighbor matching. Table 3 presents the regression results for both the pre-matching and post-matching samples. The results indicate that the coefficient of FinCoop remains negative and statistically significant in the matched sample. The persistent significance and increased magnitude of the treatment effect after matching confirm that our baseline findings are robust and not driven by idiosyncratic structural differences between nations (see Table 3).

4.2.4. Instrumental variables test

To address potential endogeneity concerns arising from self-selection bias or omitted variable bias—whereby countries with inherently weaker macroeconomic fundamentals might be more inclined to join the BRICS financial framework—this study employs an instrumental variables (IV-2SLS) approach. We construct a Bartik-type instrument (IV) by interacting the initial external debt-to-GNI ratio from 2004 with a post-treatment time dummy representing the formal operationalization of the BRICS financial architecture in 2015. The relevance of this instrument is rooted in the “original sin” hypothesis; countries burdened with high levels of foreign-currency-denominated debt face greater balance sheet vulnerabilities and thus possess a stronger strategic incentive to seek alternative non-Western liquidity backstops and local currency settlement systems to mitigate the pro-cyclicality of the US dollar cycle. Critically, the 2004 debt structure predates the policy shock by over a decade, satisfying the exclusion restriction as it is unlikely to influence realized exchange rate volatility in the 2015–2024 period through any channel other than the participation in BRICS financial cooperation.
The 2SLS estimation results, reported in Table 4, reaffirm the stabilizing efficacy of institutionalized cooperation. In the first-stage regression, the instrument exhibits a positive and highly significant coefficient, confirming that initial external vulnerability is a potent predictor of subsequent policy adoption. Diagnostic tests support the validity of the framework: the Cragg-Donald Wald F-statistic (42.15) comfortably exceeds the critical threshold of 10, dismissing concerns regarding weak identification, while the Kleibergen-Paap rk LM test rejects the null hypothesis of under identificatio. In the second stage, the coefficient for $FinCoop$ remains negative and statistically significant at the 1% level. Notably, the magnitude of the IV estimate is larger than the baseline OLS coefficient, suggesting that the baseline results may have been subject to a downward bias and that the true causal impact of the BRICS de-dollarization agenda on curbing exchange rate fluctuations is even more pronounced than previously estimated.

4.2.5. Additional robustness checks

To further verify the reliability of the baseline findings, we conduct several additional robustness tests, with results reported in Table 5. First, we replace the dependent variable with an alternative measure, the Coefficient of Variation (FX CV), to ensure that the results are not sensitive to the specific calculation of exchange rate volatility. As shown in Column (1), the coefficient of FinCoop remains negative and statistically significant at the 1% level.


Second, we extend the rolling window for volatility calculation from three years to five years (FX Vol. 5y) to capture longer-term trends. The results in Column (2) confirm that the stabilizing effect of financial cooperation persists over an extended time horizon.
Thirdly, to address concerns that the results might be driven by outliers or extreme economic conditions, we exclude subsamples experiencing hyper-inflation (defined as years where CPI exceeds 20%). The estimated coefficient in Column (3) remains highly significant and consistent in magnitude with the baseline results. Collectively, these tests demonstrate that the negative impact of BRICS financial cooperation on exchange rate fluctuations is robust across alternative variable definitions, temporal windows, and sample compositions.

Furthermore, to address potential bias regarding the 2024 expansion cohort (Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE) due to their limited treatment duration, we perform a sub-sample analysis excluding these nations. As shown in Column (4), the coefficient for FinCoop remains negative and statistically significant. This confirms that the observed stabilization is robustly driven by the long-standing institutionalized cooperation of the 2015 core members.

Lastly, responding to the critical concern that the estimated effects might primarily reflect structural differences between BRICS members and other nations, we re-estimate the model by excluding all BRICS member countries from the sample. This test focuses exclusively on the potential spillover effects of BRICS financial cooperation on non-member economies. As reported in Column (5), even when the BRICS nations themselves are removed, the coefficient of FinCoop remains negative and significant at the 1% level. This suggests that the establishment of the NDB and CRA provides broader systemic benefits to the global financial architecture, enhancing the currency stability of non-participating emerging and developing economies through positive externalities. Collectively, these tests demonstrate that the negative impact of BRICS financial cooperation on exchange rate fluctuations is robust across alternative variable definitions, temporal windows, and sample compositions.

4.3. Mechanism analysis4.3.1. Mechanism A: the local credit channel

Table 6 reports the mediation analysis for the local credit channel. The results in Column (1) indicate that BRICS financial cooperation significantly enhances the domestic credit ratio, reflecting an expansion in local-currency financial depth. In Column (2), the significant negative coefficient for the credit ratio, alongside a persistent treatment effect, confirms that financial cooperation stabilizes exchange rates by optimizing national debt structures and mitigating “original sin”. These ‘slow-moving’ structural shifts should be viewed as the long-term anchors that sustain the stability initially triggered by institutional signaling. The initial compression in risk premiums (the signaling effect) lowers the cost of local-currency financing, which subsequently accelerates the optimization of domestic credit structures. Thus, the observed stabilization is the result of a synergetic process: an immediate reduction in speculative volatility through market signaling, followed by a durable reduction in realized volatility through the mitigation of ‘original sin’ and the attraction of resilient FDI. These findings suggest that de-dollarization in the banking sector serves as a critical transmission pathway for reducing currency volatility.

4.3.2. FDI inflow channel

Table 7 explores the second transmission pathway: capital account stabilization via foreign direct investment (FDI). The results in Column (1) demonstrate that FinCoop significantly stimulates FDI inflows, suggesting that the BRICS institutional framework enhances investor confidence and reduces cross-border transaction costs. In Column (2), when both the policy dummy and the mediator are included, FDI exerts a significant negative effect on FX Vol, while the treatment effect of financial cooperation remains robust. These findings support the “Investment Attraction” channel, whereby financial cooperation fosters a more predictable financial environment that attracts long-term, resilient capital. Unlike volatile portfolio flows, steady FDI inflows provide a stable source of foreign exchange demand, thereby anchoring the domestic currency and mitigating speculative fluctuations.

4.4. Moderation analysis

Table 8, Column (1) shows a negative and significant interaction between FinCoop and Reserves. This indicates that the volatility-reducing effect of financial cooperation is amplified by higher reserve adequacy. Robust reserves provide the liquidity buffers and market credibility necessary for de-dollarization initiatives to effectively anchor the currency.

Column (2) reveals a significant negative interaction for FinCoop × PolStab, suggesting that political stability acts as a catalyst. In stable institutional environments, the government's commitment to BRICS financial frameworks is perceived as more credible by global markets, thereby enhancing the policy's effectiveness in curbing speculative currency fluctuations.
Conversely, Column (3) shows a positive and significant interaction for FinCoop × CPI. This indicates that high inflation creates a “credibility friction” that attenuates the benefits of cooperation. When internal price stability is compromised, the local currency's store-of-value function weakens, making it harder for international coordination to mitigate exchange rate volatility.

4.5. Heterogeneity analysis

4.5.1. The role of external vulnerability and financing dependency

The stabilizing efficacy of BRICS financial cooperation is fundamentally contingent upon a country's exposure to the global financial cycle and its reliance on external dollar-denominated financing. To identify the varying policy impacts under different external financing requirements, we partition the sample into “High Dependency (CA-High Dep)" (characterized by larger deficits) and “Low Dependency (CA-Low Dep)" groups based on the median current account balance as a percentage of GDP. This grouping rationale is designed to test whether the non-Western financial safety net performs a more robust “lender of last resort” function for economies facing significant current account pressures. The empirical evidence in Table 9 reveals that the volatility-reducing effect of institutionalized cooperation is exclusively significant in the high-dependency group, while appearing relatively attenuated in surplus or low-dependency nations. This disparity underscores the role of the BRICS financial framework—particularly the Contingent Reserve Arrangement (CRA)—as a critical institutional buffer for economies most susceptible to speculative capital outflows and USD liquidity crunches. For these vulnerable economies, the provision of alternative liquidity facilities and the promotion of local currency settlements serve to decouple domestic monetary conditions from the pro-cyclicality of Federal Reserve policy shifts, thereby mitigating the systemic “Dilemma” inherent in the dollar-centric architecture.

4.5.2. Domestic financial depth and structural robustness

Beyond external factors, the capacity of a nation to internalize the benefits of de-dollarization depends on the structural robustness and depth of its domestic financial markets. We utilize the ratio of domestic credit to the private sector (% of GDP) as a proxy for financial depth and classify the sample into “Deep Finance” and “Shallow Finance” groups based on the median value. This classification aims to evaluate how domestic credit market capacity regulates the transmission efficiency of international institutional cooperation. As demonstrated in Table 10, the contribution of BRICS cooperation to exchange rate stability is significantly amplified in economies with more mature financial systems. In these “Deep Finance” environments, institutional support from the New Development Bank (NDB) and the expansion of local currency bond markets are more effective in optimizing national balance sheets and mitigating the “original sin” phenomenon. A sophisticated domestic credit channel facilitates a more efficient structural transition from dollar-denominated debt to local currency liabilities, thereby weakening the pro-cyclical valuation effects typically triggered by global financial volatility. Furthermore, countries with higher financial depth possess the requisite infrastructure to support seamless local currency settlements, which not only lowers transaction costs but also anchors the currency by attracting resilient Foreign Direct Investment (FDI). In contrast, economies with shallow financial markets may encounter institutional bottlenecks or credit frictions that hinder the effective translation of international financial coordination into realized macroeconomic resilience.

4.5.3. Heterogeneity by Hyperinflation History

The efficacy of institutionalized de-dollarization is further constrained by the structural “hysteresis” of domestic currency usage. In economies with a chronic history of hyperinflation, such as Argentina or Zimbabwe, the US dollar often transcends its role as a mere reserve asset to become the primary “unit of account” and “store of value” for the general public, a phenomenon known as spontaneous or unofficial dollarization. In such environments, the institutional benefits provided by the BRICS framework—such as NDB liquidity or local currency settlement systems—are likely to be marginalized by deep-rooted domestic distrust in local monetary authorities. To test this, we partition the sample into a “Hyperinflation History” group (countries that have experienced annual CPI exceeding 50% at any point in the sample) and a “Stable Inflation History” group. As reported in Table 11, the volatility-reducing effect of financial cooperation is highly significant and robust for the stable group. Conversely, the coefficient for the hyperinflation group is markedly smaller and statistically insignificant, suggesting that new institutional safety nets struggle to displace the dollar's entrenched role in economies plagued by long-term monetary instability.

5. Further discussion

The empirical magnitude of the estimated coefficients warrants a deeper economic interpretation within the broader context of the International Monetary System (IMS). Our results indicate that participation in BRICS financial cooperation reduces exchange rate volatility by approximately 14.2% (based on the IV estimates), a reduction that is both statistically significant and economically substantial for emerging markets (EMEs). This “stabilizing anchor” effect suggests that the NDB and CRA do not merely provide emergency liquidity but serve as a preemptive signal to international investors, effectively lowering the risk premiums associated with “original sin.” By diversifying the institutional backing of their domestic currencies, member states successfully dampen the pro-cyclicality of the global financial cycle, transforming the BRICS framework into a critical buffer that complements, rather than merely duplicates, the existing IMF-led global safety net.

When compared to other regional financial arrangements (RFAs), such as the Chiang Mai Initiative Multilateralization (CMIM) in East Asia, the BRICS framework exhibits a distinct operational logic. While the CMIM is primarily designed as a crisis-activated swap network tied closely to IMF conditionality (Hyun & Paradise 2020), the BRICS cooperation model emphasizes long-term credit structural optimization through the NDB's development financing and the CRA's de-linked liquidity support. Our comparative analysis suggests that the BRICS arrangement provides a stronger “institutional anchoring” effect for exchange rates because it addresses the structural roots of currency vulnerability—namely, the lack of non-dollar financing channels—rather than solely focusing on short-term balance-of-payments relief. Consequently, the de-dollarization initiatives within BRICS represent a more fundamental shift toward a multipolar currency order, offering a unique template for enhancing the monetary sovereignty of the Global South.

6. Conclusion and policy implications

6.1. Conclusion

This study provides a robust empirical assessment of the macroeconomic stabilizing potential of institutionalized South-South cooperation, specifically focusing on the impact of the BRICS de-dollarization agenda on exchange rate stability. Utilizing a multi-period difference-in-differences (DID) framework across 99 countries, the analysis demonstrates that the operationalization of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) significantly curtails realized exchange rate volatility among member states. These findings remain remarkably resilient to a battery of robustness checks, including parallel trend tests, propensity score matching (PSM-DID), and alternative variable specifications, confirming that the observed stabilization is a direct consequence of institutionalized synergy rather than pre-existing economic trajectories. The research delineates two pivotal transmission pathways: the optimization of internal credit structures, which mitigates the systemic “original sin” by shifting debt profiles toward local currencies, and the stabilization of the capital account through the attraction of long-term, resilient Foreign Direct Investment (FDI). By fostering an alternative financial architecture, the BRICS framework effectively allows member states to decouple their domestic monetary conditions from the pro-cyclicality of the global financial cycle and the discretionary shifts of U.S. monetary policy.
Furthermore, the efficacy of this financial cooperation is conditioned by critical domestic boundary conditions and structural heterogeneities. Moderation analysis reveals that the volatility-reducing impact of the BRICS framework is significantly amplified by robust foreign exchange reserves and high levels of political stability, which together enhance the credibility of de-dollarization initiatives in the eyes of global markets. Conversely, high domestic inflation introduces a “credibility friction” that attenuates these institutional benefits, as domestic price instability undermines the local currency's function as a store of value. Our heterogeneity analysis further clarifies that the stabilizing influence of the BRICS safety net is most transformative for economies characterized by high external financing dependency and significant current account deficits, for whom the CRA provides an essential “lender of last resort” backstop. However, the successful internalization of these benefits is fundamentally tied to domestic financial depth; countries with more mature credit markets and sophisticated financial infrastructures demonstrate a superior capacity to translate international cooperation into realized macroeconomic resilience, whereas those with shallow markets may face institutional bottlenecks.

6.2. Policy implications

The findings of this research offer several strategic imperatives for emerging market policymakers navigating an increasingly fragmented international monetary system. First, while the US dollar has historically provided a high degree of global liquidity and standardized transaction efficiency, there is a clear necessity for the continued deepening of multilateral financial institutions like the NDB and the CRA to serve as a complementary institutional buffer. Rather than pursuing an abrupt decoupling, member states should enhance the capital capacity of these non-Western safety nets to provide a reliable liquidity backstop. This approach allows nations to mitigate the risks of global liquidity shocks while still leveraging the systemic benefits of established international reserve currencies.
Second, the promotion of a comprehensive local-currency ecosystem should be prioritized as a tool for risk diversification rather than a uniform replacement for the dollar. Policymakers must encourage the development of local-currency bond markets and bilateral swap lines to structurally reconfigure national balance sheets. By minimizing currency mismatches and valuation risks inherent in dollar-denominated debt, nations can transform their exchange rates from shock amplifiers into shock absorbers. However, the efficacy of this transition is contingent upon the depth of domestic financial markets, and shallow-market economies must remain cautious of the institutional bottlenecks that may arise when shifting away from established dollar-based financing.
Finally, the success of international financial coordination remains inextricably linked to domestic macroeconomic discipline. To maximize the “marginal utility” of the BRICS framework, member states must maintain prudent monetary policies to anchor inflation expectations, as high domestic inflation creates a “credibility friction” that can undermine de-dollarization efforts. De-dollarization is not a panacea for structural weaknesses; without a stable domestic “store of value” and political consistency, the systemic benefits of international coordination will be eroded by idiosyncratic frictions. Ultimately, a multipolar financial world requires a balanced strategy: constructing resilient external architectures while cultivating robust, deep, and stable domestic financial environments.
CRediT authorship contribution statement

Ronghao Deng: Writing – original draft, Resources, Supervision, Data curation, Writing – review & editing. Hanbing Xie: Supervision, Data curation, Writing – review & editing.

Russia
Source: bricsconnect.co

Putin says BRICS now drives nearly half of global economic growth as intra-nation trade surpasses $1tn

Russian President Vladimir Putin has hailed BRICS as an increasingly influential force in the global economy, saying the group now accounts for nearly half of global economic growth and has surpassed $1 trillion in internal trade.
Speaking at the plenary session of the 29th St Petersburg International Economic Forum (SPIEF), Putin argued that economic power is steadily shifting towards emerging markets and developing economies, with BRICS countries playing a central role in that transformation.
“During the existence of BRICS, its share of global merchandise trade has more than doubled, while intra-BRICS trade has already exceeded $1 trillion,” Business Standard quoted him as saying. He added that the group now represents about 40 percent of global gross domestic product when measured by purchasing power parity (PPP).
The BRICS grouping, originally comprising Brazil, Russia, India, China and South Africa before expanding to include additional members, has increasingly positioned itself as a platform for cooperation among emerging economies seeking greater influence in global governance and trade.
According to Putin, BRICS countries generated approximately 49 percent of global GDP growth over the past five years, reflecting what he described as a broader rebalancing of the world economy away from traditional Western centres of power.
The Russian leader also highlighted BRICS’ growing technological footprint, saying member states now account for more than one-third of global high-tech exports. He pointed to China’s leadership in artificial intelligence patents, India’s prominent software industry and Russia’s advances in digital technologies, financial services and nuclear energy.
“The world becomes fairer when economic growth embraces billions of people who were previously on the periphery of the global economy,” Putin told delegates.

Russia
Source: link

Whether in trade, investment or macroeconomic policy, the digitalization of the world economy is becoming an inexorable trend as well as a potent factor of countries’ competitiveness. Global trade is becoming increasingly driven by digital services and e-commerce, while trade policy is significantly impacted by digital economic agreements (DEAs). In the real sector, productivity growth is critically becoming dependent on the expansion in the digital economy. In monetary policy there is the propagation of projects pursued by Central Banks to launch national digital currencies, with mounting efforts by countries to explore the pathways to Central Bank Digital Currencies (CBDC) inter-operability. For emerging markets, most notably the BRICS+ economies that are leading the global CBDC efforts, a platform for inter-operable CBDCs could represent one of the most tangible contributions of the developing economies to the emergence of a new modern era monetary and financial architecture of the global economy.

The CBDC progression across the world economy

An increasing number of economies and even regional blocs are at this stage pursuing the goal of creating their very own Central Bank Digital Currencies (CBDCs)[1] – the building material of the new global financial architecture. At this stage, there are only 3 economies that have launched a full-fledged retail CBDC accessible to the use by the public:

• Bahamas (Sand Dollar): launched in October 2020, this project represented the first nationwide CBDC undertaking
• Nigeria (eNaira): launched in October 2021 with the main focus being greater financial inclusion
• Jamaica (JAM-DEX): initiated in July 2022

In terms of CBDC testing platforms the most well-known and one of the more advanced is the M-bridge – a system that represents a multi-CBDC platform that brought together People’s Bank of China (PBOC), Hong Kong Monetary Authority (HKMA), Bank of Thailand (BOT), Central Bank of the United Arab Emirates (CBUAE), Saudi Central Bank (SAMA) as well as the Bank for International Settlements (BIS) – Innovation Hub Hong Kong Centre (coordinating role). Interestingly, all major country participants are related in some form to the BRICS grouping, with China being a core group member, Saudi Arabia being an invited country, Thailand being a member of the BRICS partnership belt and UAE being a core BRICS member that acceded as part of the 2023-2024 expansion.
After the BRICS summit in Moscow in 2024 and the discussions on the possibility of emulating the progress made in CBDC inter-operability within the M-bridge framework, the Bank for International Settlements (BIS) handed over the further development of the M-bridge system to its participants[2]. While the completion of the M-bridge mission is still at least several years away, the platform attained a critical degree of progress in demonstrating the technological feasibility of CBDC transactions and the benefits that such a system could deliver to participating economies. In this respect, the M-bridge framework remains a viable model for the BRICS economies in forging ahead with the CBDC inter-operability efforts.
Outside of the M-bridge project, the BRICS economies are among the most active participants in other key CBDC co-integration efforts. In particular, South Africa (BRICS core member) together with Malaysia (BRICS partner country) participate in Project Dunbar – an effort to build a platform for multi-CBDC transactions that counts Australia, Singapore and the BIS among its other participants.
BRICS economies are also among the most advanced in launching key pilot projects on CBDCs, which in particular concerns China (e-CNY) (currently the world’s largest CBDC pilot covering 17 provincial regions) as well as India (Digital Rupee – e₹) with its CBDC project covering segments of the economy such as government state benefits and featuring wholesale and retail pilots.
The CBDC system has also been tested at the regional level in emerging markets – this track was pioneered by the Eastern Caribbean Currency Union. In particular, the Eastern Caribbean Central Bank launched its CBDC (named DCash) in 2021 – the project operated for more than a year providing access to settlements throughout the union. The DCash system operated on a private blockchain hosted on Google Cloud, with CBDC users being able to send and receive transfers via a mobile app after setting up a wallet with an authorized bank. In 2024 the project was discontinued after systemic disruptions with the objective of reevaluating its results ahead of the DCash 2.0 relaunch.    

What role for BRICS?

What the discussion above suggests is that emerging markets and BRICS+ economies are quite active in the CBDC domain. During its BRICS chairmanship in 2024 Russia presented its vision of the possible changes in the global monetary system in a report titled “Improvement of the international monetary and financial system. Strengthening multilateralism for just global development and security”. In particular, the report calls for “introducing DLT solutions or a new multinational platform based on modern technologies, which would include a financial messaging component and allow to conduct settlement via tokens backed by national currencies, CBDCs, at the discretion of each participating country – this approach would allow a greater degree of decentralization”[3].
The authors of the report point to the elimination of credit risk and the reduction in processing time and costs associated with the introduction of a DLT settlement model in which CBDCs are utilized. The policy proposal directly references the case of M-bridge as a potential model for such a system for BRICS, with the cost of DLT transactions amounting to just 1-2% of the standard comparable operation. The latter in turn translates into palpable savings: “the economic effect in the context of BRICS cross-border trade, might yield savings of up to USD 15 bn per annum in a scenario where half of all cross-border transfers are done via DLT solutions”[4].   
Against the backdrop of intensifying geopolitical tensions, including the pressure exerted on the BRICS economies from the US, India as the chair of the BRICS grouping has apparently delivered a further impulse to discussions on the possibility of linking BRICS countries CBDCs. While no official confirmations have been made, media reports do suggest that the Central Bank of India has recommended to the government to include the co-integration of BRICS countries’ CBDCs into the 2026 agenda for India’s chairmanship in the bloc[5]. As regards the BRICS common currency, this path is currently downplayed by BRICS representatives in their public statements, with officials prioritizing the development of reliable settlement mechanisms across emerging market economies. Nonetheless, expert discussions are bound to continue and the CBDC track offers a potential gateway to rendering the BRICS common currency project feasible.
At this stage, there have been a number of possible modalities for a BRICS common currency proposed – ranging from a unit of account to a reserve currency and to digital currency that may be used to conduct transactions across BRICS+ economies. The first proposal advanced in 2018 in Valdai club discussions was focused on the creation of a reserve currency and was given the code name R5 – due to the coincidence of all core BRICS economies having their currencies starting with the letter R (renminbi, rouble, rand, real, rupee). Subsequent discussions prioritized issues such as the technical feasibility of launching a common currency – something that led to the proposal of introducing a unit of account – arguably the most straightforward and simplest way of creating the common currency. This track was developed and favored by Alexei Mozhin, who was a key pioneer of the R5 project and who played a leading role in organizing the discussions of the topic within the BRICS+ expert community.
Within these discussions, the CBDC path featured quite prominently, suggesting that if the BRICS economies do opt for a common currency, it may be precisely the CBDC track that technically may prove to be the most feasible and promising for such a project. According to one of the leading Brazilian economists, Paulo Nogeira Batista Jr., the CBDC framework could allow the BRICS economies to conduct mutual settlements without creating a physical monetary unit. As argued by Paulo Nogeira Batista Jr, the common currency “would be used only for cross border transactions and as a reserve asset, functioning in parallel to national currencies. It would not need to exist in physical form as paper money and coins. It could be a digital currency, similar to the Central Bank Digital Currencies (CBDCs) that are in the process of being created in a number of countries”[6].
The hope at this stage then is that further discussions and cooperation among the BRICS+ experts will lead to a credible framework for a common BRICS currency predicated on CBDC inter-operability.

Final thoughts

Perhaps what matters most in the common efforts of BRICS economies to bring greater inter-operability into their CBDC projects is that they are very much in line with the development trends in the evolution of settlement and payment systems in the global economy. This is currently the technological frontier of monetary system engineering that attracts the efforts of some of the leading emerging and advanced economies as well as international organizations such as the Bank for International Settlements (BIS) and the International Monetary Fund (IMF).
In the end, the BRICS+ grouping is well positioned not just to participate in the emerging new financial architecture of the world economy, but to lead some of its most dynamic and promising tracks such as the CBDC inter-operability route. A credible framework of cross-border payments based on CBDCs may deliver sizeable benefits via the reduction in the time and costs of transactions, a greater transparency and security in financial operations, greater optionality in terms of payment methods as well as greater inclusivity for emerging markets in building the new international financial architecture.
A condensed version of this article was published by Roscongress on its official website: https://roscongress.ru/en/materials/the-cbdc-inter-operability-path-for-brics-exploring-the-prospects-/
[1] https://econs.online/articles/finansy/tsifrovye-valyuty-tsentralnykh-bankov-slozhnosti-vnedreniya/
[2] https://www.bis.org/speeches/sp241031.htm
[3] https://minfin.gov.ru/common/upload/press_center/2024/10/BRICS_Research_on_IMFS_20241008.pdf
[4] https://minfin.gov.ru/common/upload/press_center/2024/10/BRICS_Research_on_IMFS_20241008.pdf
[5] https://www.reuters.com/world/india/indias-central-bank-proposes-linking-brics-digital-currencies-sources-say-2026-01-19/
[6] https://valdaiclub.com/a/highlights/brics-transactions-in-national-currencies/

Yaroslav Lissovolik, Founder, BRICS+ Analytics
Image by Grok

Russia
Source: brics-plus-analytics.org

There are devastating events in life that are hard to come to terms with and last week was one such shock – the loss of Alexey Mozhin, one of the leading intellectuals in Russia on the world economy and international economic relations. I had the honor of working under his leadership in the Russian Executive Office of the International Monetary Fund (IMF) and his insights and views played a critical role in forming my own take on how things worked in the global economy. His perspectives on international developments were prescient and profound, his goal was not just to observe and interpret but also find the ways to address the mounting ills of the global economy through concrete economic policy measures. Even more than that, his aspiration was to imagine a global economic system that would be revitalized through greater optionality of financial instruments, currencies, settlement mechanisms and economic development models.
One of my most vivid recollections of meetings with Alexey Mozhin was during his visit to Moscow and a discussion we had over tea and coffee in 2007 before the 2008-2009 financial crisis. At a time when most of the pundits and observers of the world economy were still calling for ever higher stock market records, sky-high commodity prices and inflows into EM, Alexey Mozhin struck a different note – in his words the coming years would unleash a crisis unlike anything witnessed before, a new type of crisis with powerful spillovers across the globe. His vision played out in less than a year with a force that was to redraw global markets’ regulatory frameworks. His unparalleled experience at the IMF (he served as Russia’s Executive Director to the International Monetary Fund (IMF) for 32 years (1992–2024) and as the Dean of the Executive Board of the IMF since 2014) gave him a unique edge in understanding the inter-play between geopolitics and international economics – something that also enabled him to foresee the severe downturn in the international relations and the deleterious impact this had on the state of the markets and the world economy. 
Being in the very epicenter of the international financial system and having witnessed within the IMF the passing of the world economy through a string of crises – from the Asian crisis of 1997 to 2008-2009 global financial crisis and the 2020-2021 pandemic – gave him a keen sense of how economic fragilities coalesce into “perfect storms”. In this respect, his key concern was the instability of the international economic system that relied excessively on the economic plight of the West. The latter in his view was increasingly susceptible to moral hazard problems associated with the reserve currency status of the USD and the Euro, resulting in fiscal policy loosening that stoke growth in the already high levels of public debt. The constraints on the fiscal side resulted in severe underfinancing of infrastructure development and the problem of de-industrialization that he saw as being one of the key concerns for economies such as the US. Furthermore, the current push to re-industrialize in the US is inviting further economic policy excesses in the form of rampant protectionism, with severe negative spillover effects for the global economy. It was this vicious circle of economic policies and outcomes that fed Alexey Mozhin’s pessimism regarding the future of the unipolar system and its vulnerability to bouts of new crisis shocks.
But predicting crises, while arguably a sought-after quality for any economist, was not his fundamental objective – the key theme for Alexey Mozhin was the reform of the international monetary system. In particular, it was the creation of alternatives to the current unipolar setup of the world economy and within this track his focus was on the so-called R5 project (the name of the project comes from the fact that all core BRICS-5 currencies start with the letter R), namely the creation of a common BRICS currency. To discuss the possible modalities of the BRICS common currency and the broader global economic conditions, Alexey Mozhin formed an expert group composed of representatives from BRICS economies that included among others his former colleagues from the IMF Executive Board[1]. His approach to leading this group (of which I was very proud to be a member) was very democratic and open to diverging views. In line with his proposals, the creation of the R5 in the form of an accounting unit would not be fraught with significant difficulties and could be a feasible initial step towards a graduation of the R5 project to higher levels of maturity later on. He also outlined his suggestions for the possible modalities of the future currency and the relative shares of the five BRICS national currencies that could constitute the R5 basket[2].
A related theme that he considered crucial was the expansion in the role of the Special Drawing Rights (SDR) as a potential global currency that could operate alongside the national currencies and play the role of a means of payment as well as a store of value and reserves. In effect, his idea was to take a project that has already gone through several stages at the global level and carry it further to its logical conclusion – if the SDR already performed the role of a reserve currency as well as a unit of account (in IMF transactions), why not take it to the level of a full-fledged global currency? As has often been the case with such projects and ideas, they were relegated to the back-burner by the grim geopolitical realities of the current international financial system.
Alexey Mozhin’s approach to issues such as globalization and trade liberalization was pragmatic rather than ideological – he saw significant benefits as well as costs and drawbacks that accompanied the previous phases of the globalization process. Instead of “creative destruction” in building a multipolar system, he favored dialogue and an evolutionary path to reforms that acknowledges existing realities and constraints. Such a balanced and pragmatic approach to reforming the international monetary system as well as his ability to listen to his colleagues at the Board were arguably among the key characteristics that enabled him to deliver such a unique contribution to the work of the IMF. 
In the end, the legacy of Alexey Mozhin is that of advancing a vision of a better future for the world economy via concrete proposals and initiatives. As with so many Russian intellectuals that have passed away too soon to reveal their full potential contribution, we and our descendants will be asking the question of what the world would have been like if Alexey Mozhin had been able to deliver his ideas and vision to the fullest. After his work at the IMF, he was perhaps one of the key figures within the BRICS+ space who could have led the efforts to build the foundations of a more balanced global economic system. His ideas have already charted trajectories, however, that his friends and colleagues from across the world will seek to put into practice. A true visionary capable of discerning the future contours of the emerging multipolar economic system, Alexey Mozhin, will be remembered for his ability to combine all the qualities that make not just a great economist and a skilled diplomat, but an intellectual whose foresight and ideas have outpaced the drift of our time.
[1] https://tass.ru/opinions/22114983
[2] https://tass.ru/interviews/17281219

Yaroslav Lissovolik, Founder, BRICS+ Analytics
Image by Ekaterina Chesnokova via RIA Novosti

Russia
Source: link

Plenary session of the XXIX St Petersburg International Economic Forum.

Given the uneven course of the Russian economy during the first five months of 2026, Russian authorities, especially President Vladimir Putin, were keen to minimize the impacts of any possible stagnation at the 29th St. Petersburg International Economic Forum.
When asked by a reporter about Russia’s stagnating economy, Putin avoided a detailed response and paraphrased American novelist Mark Twain, saying "rumors of my death [i.e., the Russian economy] have been greatly exaggerated," Responsible Statecraft writes.
The conference, which attracted over 20,000 guests from approximately 130 countries, has been referred to as the "Russian Davos.” In its heyday, it attracted investors and policymakers from around the globe who were interested in Russia’s growing economy. Yet the larger delegations now are from Africa, Asia, and Eurasia, while Western countries are increasingly absent since the 2022 full-scale invasion of Ukraine.
Prior to the event, Russian representatives and state media were emphasizing the return of an official delegation from the United States. However, Robert Agee, head of the American Chamber of Commerce (AmCham), dispelled any thoughts of an official delegation attending the event.
Russian media had also initially touted an official German business delegation. Nevertheless, the German news outlet DW said the only German (unofficial) delegation to SPIEF was comprised of “several lawmakers from Germany's far-right Alternative for Germany (AfD) party.” Indeed, Russia’s Dmitriev confirmed the AfD representatives were in St. Petersburg to discuss concerns pertaining to investigations related to the Nord Stream pipeline.
Given minimal Western participation, Russian representatives instead emphasized strong relations with the Global South and BRICS, and highlighted expanded efforts to assert economic sovereignty. According to Deputy Prime Minister Alexey Overchuk, Russia has shifted its economic emphasis to the Global South and Asia, stating that “we have up to 79% of trade carried at present with these nations."
Moreover, the forum’s Russian hosts lavished special attention on the delegation from Saudi Arabia, led by Energy Minister Prince Abdulaziz bin Salman Al Saud. Saudi Arabia appeared as the guest country at the forum this year as the two countries celebrated the 100th anniversary of the establishment of diplomatic relations. As a result, SPIEF granted Saudi Arabia special status which confers the ability to showcase its investment, export, and tourism opportunities and maintain its own national pavilion at SPIEF 2026. Saudi Arabia now joins other Global South countries that have received the honorary status during previous forums, including Qatar, Egypt, the United Arab Emirates, Oman, and Bahrain.
According to the Saudi Energy Minister, the country signed “30 different cooperation agreements, particularly in energy, education, and tourism."
Further emphasizing Russia’s economic reorientation to the BRICS and the Global South, Uzbek President Shavkat Mirziyoyev, Tanzanian President Samia Suluhu Hassan, and Chinese Vice President Han Zheng appeared on stage with Putin for a roundtable after his keynote speech on June 5.
During the speech, Putin said the “existing hierarchical model of global trade and cooperation is undergoing profound changes.” This statement referred to his assertion that the current global economic model is in the midst of a significant transition towards multipolarity and that BRICS countries are driving this growth.
Furthermore, Putin stated, "If you look at the global GDP of the last five years, you will see that almost half of its annual growth, 49%, is accounted for by BRICS countries. The contribution of the so-called G7 is estimated at 18%." He then cited estimates from the International Money Fund (IMF) and World Bank that predicted economic growth for the G7 countries at 0.5% through the end of the current decade compared with over 4.1% for BRICS countries.
Ultimately, it is important to understand Russian officials used SPIEF 2026 to strategically shift focus from a global investment event focused on the Russian economy to a gathering focused squarely on asserting Russia’s economic sovereignty and commitment to strengthening the course of multipolarity with its partners in the BRICS and Global South countries.
Additionally, they sought to lay the groundwork for a successful BRICS Summit in India in September. Thus, SPIEF 2026 was not selling the Russian relationships and deals of the past, but rather a strategic vision for a new global order during a time of great uncertainty.

Russia
Source: brics-plus-analytics.org

Whether in trade, investment or macroeconomic policy, the digitalization of the world economy is becoming an inexorable trend as well as a potent factor of countries’ competitiveness. Global trade is becoming increasingly driven by digital services and e-commerce, while trade policy is significantly impacted by digital economic agreements (DEAs). In the real sector, productivity growth is critically becoming dependent on the expansion in the digital economy. In monetary policy there is the propagation of projects pursued by Central Banks to launch national digital currencies, with mounting efforts by countries to explore the pathways to Central Bank Digital Currencies (CBDC) inter-operability. For emerging markets, most notably the BRICS+ economies that are leading the global CBDC efforts, a platform for inter-operable CBDCs could represent one of the most tangible contributions of the developing economies to the emergence of a new modern era monetary and financial architecture of the global economy.

The CBDC progression across the world economy
An increasing number of economies and even regional blocs are at this stage pursuing the goal of creating their very own Central Bank Digital Currencies (CBDCs)[1] – the building material of the new global financial architecture. At this stage, there are only 3 economies that have launched a full-fledged retail CBDC accessible to the use by the public:

• Bahamas (Sand Dollar): launched in October 2020, this project represented the first nationwide CBDC undertaking
• Nigeria (eNaira): launched in October 2021 with the main focus being greater financial inclusion
• Jamaica (JAM-DEX): initiated in July 2022

In terms of CBDC testing platforms the most well-known and one of the more advanced is the M-bridge – a system that represents a multi-CBDC platform that brought together People’s Bank of China (PBOC), Hong Kong Monetary Authority (HKMA), Bank of Thailand (BOT), Central Bank of the United Arab Emirates (CBUAE), Saudi Central Bank (SAMA) as well as the Bank for International Settlements (BIS) – Innovation Hub Hong Kong Centre (coordinating role). Interestingly, all major country participants are related in some form to the BRICS grouping, with China being a core group member, Saudi Arabia being an invited country, Thailand being a member of the BRICS partnership belt and UAE being a core BRICS member that acceded as part of the 2023-2024 expansion.
After the BRICS summit in Moscow in 2024 and the discussions on the possibility of emulating the progress made in CBDC inter-operability within the M-bridge framework, the Bank for International Settlements (BIS) handed over the further development of the M-bridge system to its participants[2]. While the completion of the M-bridge mission is still at least several years away, the platform attained a critical degree of progress in demonstrating the technological feasibility of CBDC transactions and the benefits that such a system could deliver to participating economies. In this respect, the M-bridge framework remains a viable model for the BRICS economies in forging ahead with the CBDC inter-operability efforts.
Outside of the M-bridge project, the BRICS economies are among the most active participants in other key CBDC co-integration efforts. In particular, South Africa (BRICS core member) together with Malaysia (BRICS partner country) participate in Project Dunbar – an effort to build a platform for multi-CBDC transactions that counts Australia, Singapore and the BIS among its other participants.
BRICS economies are also among the most advanced in launching key pilot projects on CBDCs, which in particular concerns China (e-CNY) (currently the world’s largest CBDC pilot covering 17 provincial regions) as well as India (Digital Rupee – e₹) with its CBDC project covering segments of the economy such as government state benefits and featuring wholesale and retail pilots.
The CBDC system has also been tested at the regional level in emerging markets – this track was pioneered by the Eastern Caribbean Currency Union. In particular, the Eastern Caribbean Central Bank launched its CBDC (named DCash) in 2021 – the project operated for more than a year providing access to settlements throughout the union. The DCash system operated on a private blockchain hosted on Google Cloud, with CBDC users being able to send and receive transfers via a mobile app after setting up a wallet with an authorized bank. In 2024 the project was discontinued after systemic disruptions with the objective of reevaluating its results ahead of the DCash 2.0 relaunch.

What role for BRICS?

What the discussion above suggests is that emerging markets and BRICS+ economies are quite active in the CBDC domain. During its BRICS chairmanship in 2024 Russia presented its vision of the possible changes in the global monetary system in a report titled “Improvement of the international monetary and financial system. Strengthening multilateralism for just global development and security”. In particular, the report calls for “introducing DLT solutions or a new multinational platform based on modern technologies, which would include a financial messaging component and allow to conduct settlement via tokens backed by national currencies, CBDCs, at the discretion of each participating country – this approach would allow a greater degree of decentralization”[3].
The authors of the report point to the elimination of credit risk and the reduction in processing time and costs associated with the introduction of a DLT settlement model in which CBDCs are utilized. The policy proposal directly references the case of M-bridge as a potential model for such a system for BRICS, with the cost of DLT transactions amounting to just 1-2% of the standard comparable operation. The latter in turn translates into palpable savings: “the economic effect in the context of BRICS cross-border trade, might yield savings of up to USD 15 bn per annum in a scenario where half of all cross-border transfers are done via DLT solutions”[4].   
Against the backdrop of intensifying geopolitical tensions, including the pressure exerted on the BRICS economies from the US, India as the chair of the BRICS grouping has apparently delivered a further impulse to discussions on the possibility of linking BRICS countries CBDCs. While no official confirmations have been made, media reports do suggest that the Central Bank of India has recommended to the government to include the co-integration of BRICS countries’ CBDCs into the 2026 agenda for India’s chairmanship in the bloc[5]. As regards the BRICS common currency, this path is currently downplayed by BRICS representatives in their public statements, with officials prioritizing the development of reliable settlement mechanisms across emerging market economies. Nonetheless, expert discussions are bound to continue and the CBDC track offers a potential gateway to rendering the BRICS common currency project feasible.
At this stage, there have been a number of possible modalities for a BRICS common currency proposed – ranging from a unit of account to a reserve currency and to digital currency that may be used to conduct transactions across BRICS+ economies. The first proposal advanced in 2018 in Valdai club discussions was focused on the creation of a reserve currency and was given the code name R5 – due to the coincidence of all core BRICS economies having their currencies starting with the letter R (renminbi, rouble, rand, real, rupee). Subsequent discussions prioritized issues such as the technical feasibility of launching a common currency – something that led to the proposal of introducing a unit of account – arguably the most straightforward and simplest way of creating the common currency. This track was developed and favored by Alexei Mozhin, who was a key pioneer of the R5 project and who played a leading role in organizing the discussions of the topic within the BRICS+ expert community.
Within these discussions, the CBDC path featured quite prominently, suggesting that if the BRICS economies do opt for a common currency, it may be precisely the CBDC track that technically may prove to be the most feasible and promising for such a project. According to one of the leading Brazilian economists, Paulo Nogeira Batista Jr., the CBDC framework could allow the BRICS economies to conduct mutual settlements without creating a physical monetary unit. As argued by Paulo Nogeira Batista Jr, the common currency “would be used only for cross border transactions and as a reserve asset, functioning in parallel to national currencies. It would not need to exist in physical form as paper money and coins. It could be a digital currency, similar to the Central Bank Digital Currencies (CBDCs) that are in the process of being created in a number of countries”[6].
The hope at this stage then is that further discussions and cooperation among the BRICS+ experts will lead to a credible framework for a common BRICS currency predicated on CBDC inter-operability.

Final thoughts

Perhaps what matters most in the common efforts of BRICS economies to bring greater inter-operability into their CBDC projects is that they are very much in line with the development trends in the evolution of settlement and payment systems in the global economy. This is currently the technological frontier of monetary system engineering that attracts the efforts of some of the leading emerging and advanced economies as well as international organizations such as the Bank for International Settlements (BIS) and the International Monetary Fund (IMF).
In the end, the BRICS+ grouping is well positioned not just to participate in the emerging new financial architecture of the world economy, but to lead some of its most dynamic and promising tracks such as the CBDC inter-operability route. A credible framework of cross-border payments based on CBDCs may deliver sizeable benefits via the reduction in the time and costs of transactions, a greater transparency and security in financial operations, greater optionality in terms of payment methods as well as greater inclusivity for emerging markets in building the new international financial architecture.
A condensed version of this article was published by Roscongress on its official website: https://roscongress.ru/en/materials/the-cbdc-inter-operability-path-for-brics-exploring-the-prospects-/
[1] https://econs.online/articles/finansy/tsifrovye-valyuty-tsentralnykh-bankov-slozhnosti-vnedreniya/
[2] https://www.bis.org/speeches/sp241031.htm
[3] https://minfin.gov.ru/common/upload/press_center/2024/10/BRICS_Research_on_IMFS_20241008.pdf
[4] https://minfin.gov.ru/common/upload/press_center/2024/10/BRICS_Research_on_IMFS_20241008.pdf
[5] https://www.reuters.com/world/india/indias-central-bank-proposes-linking-brics-digital-currencies-sources-say-2026-01-19/
[6] https://valdaiclub.com/a/highlights/brics-transactions-in-national-currencies/

Yaroslav Lissovolik, Founder, BRICS+ Analytics

Turkey
Source: www.aa.com.tr

India Friday called for collaboration on food security as the South Asian nation hosted two-day BRICS Agriculture Ministers’ meeting in the central Indian state of Madhya Pradesh.
India’s Minister of Agriculture and Farmers’ Welfare Shivraj Singh said the conference was an “important platform” for "collectively addressing challenges faced by small and marginal farmers across the world," particularly those “arising from climate change, pressure on natural resources, rising input costs and uncertainties in agricultural market.”
Appealing to BRICS nations for "greater collaboration," Chouhan urged all member countries “to work together towards empowering small farmers, ensuring food security and promoting sustainable agricultural development across the world.”
“Collective efforts by BRICS nations can provide a new direction to global agriculture and contribute significantly to building a more secure, sustainable and inclusive agricultural future,” he said.
The bloc aims to create alternative financial mechanisms, curb dollar dependency, and increase Global South representation in international institutions, challenging Western-led governance structures.
India’s 2026 BRICS chair is guided by the theme “Building for Resilience, Innovation, Cooperation and Sustainability.”
Together, BRICS countries represent over 40% of the global population and over 32% of the global GDP.