SCO summit may revive talks on BRICS payment system: In the aftermath of the United States’ harsh tariffs on Indian exports and the increasing politicisation of global finance, a critical question emerges: can the trilateral engagement of India, Russia, and China catalyse a new financial architecture that decisively challenges Western dominance? If successful, this endeavour would not only reshape the mechanics of international trade and payments but also herald a transformative shift in the underpinnings of global governance, economic stability, and the geopolitical balance of power.
At the heart of this shift lies the gradual erosion of the dollar’s entrenched supremacy. Since the mid-20th century, the dollar has served as the bedrock of global finance, dominating reserve holdings, underpinning trade settlements, and enabling Washington’s leverage through sanctions and regulatory reach.
The unilateral imposition of punitive tariffs on India, coupled with aggressive use of financial weaponry such as SWIFT exclusions and secondary sanctions, starkly reveals the vulnerabilities that such dollar dependence entails for emerging powers. In response, India, Russia, and China have embarked on a concerted drive to develop alternative payment system that circumvent the dollar, signalling a decisive challenge to the existing order.
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BRICS payment system as an alternative
Technological innovation is central to this endeavour. China’s Cross-Border Interbank Payment System (CIPS) and Russia’s System for Transfer of Financial Messages (SPFS) exemplify nascent alternatives designed to offer greater autonomy from the US-controlled SWIFT payment system. Similarly, the BRICS nations are advancing BRICS Pay, an initiative to facilitate trade settlements in local currencies and reduce foreign exchange risks.
The potential launch of a digital trading platform under the aegis of the Shanghai Cooperation Organisation (SCO) would further deepen this multipolar architecture. Yet, success depends on overcoming formidable hurdles of interoperability, cybersecurity, regulatory alignment, and building trust among diverse political actors.
The financial architecture envisaged by this trilateral coalition also necessitates a diversification of global reserve currencies. The gradual inclusion of the Chinese yuan, Indian rupee, Russian ruble, and potentially central bank digital currencies (CBDCs) into international portfolios could diminish the systemic risks associated with dollar volatility and sanction exposure. Such diversification would exert pressure on international financial institutions like the IMF and World Bank to reform their governance structures, which currently reflect a Western-dominated status quo that many emerging economies view as outdated and exclusionary.
Global governance and economic stability risks
This reconfiguration extends well beyond financial mechanics; it poses a fundamental challenge to global governance. The Western-led multilateral institutions, which have historically shaped trade rules, dispute resolution, and economic policy coordination, will face growing demands for reform or risk obsolescence. Parallel institutions, whether under the BRICS, SCO, or other coalitions, may emerge to reflect the interests of rising powers. The resultant pluralism could democratise economic governance but risks fragmentation, complicating the management of transnational challenges such as financial crises, climate change, and systemic cyber risks.
Economic stability under this new paradigm will be a double-edged sword. While the dissolution of dollar hegemony safeguards national sovereignty and protects against coercive economic measures, it also introduces greater complexity and volatility. Fragmented payment systems and currency regimes could increase transaction costs and exacerbate market uncertainties. Divergent monetary policies, absent strong multilateral coordination, might lead to periodic instability, capital flight, or currency wars. Balancing independence with pragmatic cooperation will be essential to sustain a stable and predictable payment system and global economic environment.
Geopolitically, the creation of an autonomous financial infrastructure reinforces strategic autonomy. For India, Russia, and China, reducing dependency on Western-controlled financial mechanisms translates into enhanced freedom to pursue policies aligned with their national interests without undue external interference. This shift not only recalibrates power dynamics among great powers but signals to other emerging and developing nations that alternative pathways to economic sovereignty exist. The diffusion of financial agency across multiple poles could precipitate a rebalancing of alliances and partnerships, reshaping global geopolitics in unpredictable ways.
Yet, this ambitious transformation faces significant challenges. Political distrust among SCO and BRICS members, infrastructural disparities, and regulatory incompatibilities complicate integration. Establishing governance standards, ensuring transparency, and building resilient technological frameworks will require sustained political will and cooperation. Furthermore, entrenched Western powers are unlikely to acquiesce passively; countermeasures to preserve their financial dominance remain a significant risk.
Regulatory challenges and compliance risks
A critical hurdle for this nascent multipolar financial system lies in reconciling the divergent regulatory frameworks of its member states. Differences in anti-money laundering (AML), counter-terrorism financing (CTF), data privacy, and cybersecurity standards pose risks to the credibility and acceptance of alternative payment networks. Without harmonised and transparent compliance protocols, new patment systems risk exclusion from global financial markets or being perceived as conduits for illicit activities. For financial regulators, fostering multilateral dialogues and developing common standards will be vital to securing trust and interoperability.
Financial fragmentation increases systemic risks, as multiple actors may resort to counter-sanctions and retaliatory measures, intensifying economic coercion cycles. The proliferation of competing payment systems and sanctions regimes elevates the potential for financial warfare, raising the stakes for crisis management and conflict de-escalation. This multidimensional risk environment necessitates robust early-warning mechanisms and coordinated contingency planning among stakeholders to safeguard financial stability.
Central bank digital currencies (CBDCs) and blockchain-based settlement platforms are central to this new financial ecosystem. Technological sovereignty—control over the underlying infrastructure, data, and protocols—will be a critical factor in adoption and resilience. Cybersecurity, interoperability, and user trust are prerequisites for widespread use. Policymakers must balance innovation with regulatory oversight to prevent fragmentation and systemic vulnerabilities.
This potential financial architecture intersects with broader strategic realignments in the Indo-Pacific, where India balances its relationships amid US-China rivalry and seeks economic partnerships like RCEP and Quad. A multipolar financial system may recalibrate regional alliances, economic dependencies, and security architectures. Understanding these interdependencies will be critical for policymakers and strategic affairs experts navigating an increasingly complex regional environment.
Editor’s Note: This is the concluding instalment of a two-part series examining how India, Russia, and China can build an alternative global financial architecture.