UAE pushes deeper into BRICS payments, even as US sanctions tighten

US sanctions are closing in on Iranian-linked banks in the UAE. Still, the Emirates have become a key player in the changing BRICS payment scene. There is no single system for the group. Instead, BRICS is building a patchwork of bilateral payment links. This puts the UAE and its dirham at the center of a complex, high-stakes experiment in cross-border payments. The latest BRICS summit made it clear: there is no plan for a common currency or unified payment system anytime soon. The focus is on making national payment systems work together and settling in local currencies, according to Reuters and statements from the Indian Ministry of External Affairs.

Talk of a BRICS-wide payment platform has been common, but the New Delhi summit confirmed that a single currency or unified system is not coming soon. Each country is pushing for its own priorities. This has led to a rise in bilateral payment corridors, especially after Western sanctions on Russia in 2022 forced BRICS members to move away from the US dollar in their trade. The Reserve Bank of India and the Central Bank of the UAE both see these bilateral deals as a practical answer to geopolitical and market pressure.

Fragmented networks and the UAE's central position

Russia and Iran treat these alternative payment channels as lifelines against sanctions. China wants more control over its own economy. India and Gulf states, including the UAE, are trying to cut the high costs of using US-based correspondent banks. For countries like Egypt and Ethiopia, which face dollar shortages, settling in local currencies helps ease pressure on reserves. India and Russia now settle up to 96% of their trade in rupees and rubles, according to Sberbank India. This is a sharp move away from the dollar, as detailed in The Hindu.

Most progress is happening through bilateral deals. Nearly all trade between India and Russia is now settled in rupees and rubles. Russia and China have shifted almost all their trade to yuan and ruble. The UAE, with its dollar peg, acts as a source of liquidity and a go-between. The dirham's link to the dollar makes it a useful bridge currency, especially for oil trades and big transactions. Indian refiners, for example, have paid for Russian oil in dirhams instead of rupees. But using dirham accounts for Russia-related oil trades has sometimes hit banking restrictions. This shows the compliance risks that still hang over these deals.

Trade numbers show how big this shift is. Non-oil trade between the UAE and BRICS countries hit $312 billion in 2025, up 28.5% from $243 billion the year before. That's 31% of the UAE's total non-oil foreign trade. Still, even after a July 2023 deal between the Reserve Bank of India and the UAE Central Bank to settle trade in local currencies, only about 15% of UAE-India trade has moved away from the dollar. The infrastructure is growing, but adoption is slow. Strict compliance with international sanctions and the nuts and bolts of cross-border settlements are part of the reason.

Digital platforms and payment innovation

The UAE is not waiting for a BRICS-wide fix. It has launched its own local card, Jaywan, built on India's RuPay technology, and now offers a co-branded card with China's UnionPay. The "Aani" instant payment platform is being upgraded to connect directly with India's Unified Payments Interface. This should add new payment channels without needing custom setups for each partner. The Central Bank of the UAE is leading these moves, part of a wider push by central banks to modernize payment systems as global trade shifts.

The UAE and China made their first cross-border digital dirham payment on the mBridge platform in January 2024. The "Jisr" digital payments platform, launched in November, links the UAE's instant payment system with China's. It allows 24/7 transfers and supports a prepaid card with both Jaywan and UnionPay branding. More central banks are expected to join Jisr in the next year. But the mBridge project, which started with the Bank of Thailand, People's Bank of China, Hong Kong Monetary Authority, Central Bank of the UAE, and Saudi Central Bank, lost support from the Bank for International Settlements in late 2024. Now it mainly serves as a wholesale channel for China-Gulf settlements, as reported by Econiti.

The most advanced alternative payment infrastructure is actually outside the BRICS framework. The mBridge digital currency platform, once backed by the Bank for International Settlements, is still in pilot phase after the BIS pulled out in October 2024. Saudi Arabia has stepped back, but the UAE Central Bank remains a founding member with China, Thailand, Mongolia, Macau, and Hong Kong. It's not fully clear why Saudi Arabia left, but some analysts point to US pressure and the threat of tariffs on countries using rival currencies. The Bank for International Settlements is still watching these changes as part of its global payment oversight.

Sanctions and compliance risks slow progress

Since August, US authorities have stepped up action against Iranian-linked banking in the UAE. They have moved to isolate Iranian banks and restrict dealings with UAE branches of foreign banks suspected of helping Iranian transactions. The UAE Central Bank has banned Iran's biggest bank, Bank Melli, from trade finance and remittances, after a wider break in commercial ties with Iran. These steps have made UAE banks wary of joining any payment system that includes Iran, at least for now. The Federal Reserve and the US Treasury Department have also increased checks on cross-border flows involving sanctioned entities. This adds to the compliance load for UAE-based banks.

Trying to use cryptocurrencies or decentralized finance as a workaround has also hit regulatory and compliance walls. Russia has used crypto to dodge some sanctions, but the UAE keeps tight controls on digital assets. Recent investigations show that even complex setups with shell companies and stablecoins like Tether can be found and shut down. Major UAE banks have closed accounts linked to sanctioned Russian fintechs, showing their commitment to US, UK, EU, and UN sanctions. The Central Bank of the UAE has repeated its commitment to international anti-money laundering standards, following Financial Action Task Force (FATF) rules.

Building a true multilateral payment system would mean agreeing on rules for currency conversion, liquidity, clearing, settlement, data sharing, sanctions checks, and dispute resolution. That would mean giving up some control-unlikely for a group of countries with different priorities. The current web of bilateral links is less efficient but more resilient to outside pressure and harder to break than a single system. The European Central Bank's research on cross-border payments points out that fragmentation can make systems tougher, but it also means less efficiency and scale.

Adoption hurdles and the path ahead

The real test is whether regular exporters and smaller financial firms start using these new payment channels. So far, most local-currency settlement is limited to big, simple trades like oil. For example, Indian imports of oil from the UAE dropped by 5.4% in August 2026 compared to July, down to about 620,000 barrels per day. This shows how sensitive these flows are to market and regulatory changes, as reported by Reuters. Many businesses still see the cost of using dollar-based systems as worth it for the convenience and reliability. Change is likely to be slow, with real shifts taking up to five years and progress coming in fits and starts.

For now, the UAE is moving carefully but with purpose. It is expanding its payment infrastructure, building deeper links with key BRICS partners, and putting the dirham at the center of settlements. At the same time, it is dealing with the risks of US sanctions and the limits of fragmented payment networks. This may not bring a sudden change in global payments, but it is slowly changing how cross-border trade works in the region.

The UAE's experience shows that moving away from dollar-based payments is not just a technical upgrade. It is a complex balancing act involving geopolitics, compliance, and whether businesses are willing to change old habits. The Emirates' central role in this network is both a chance and a risk. The country must keep adapting to shifting rules and political pressure. For a wider look at how currency and debt issues can shake even big markets, see our earlier breakdown of French bond market volatility.

Unlike a unified payment system, which would force all players to share rules and sensitive data, the current bilateral approach lets each country keep control over its own channels. This makes the network less open to targeted disruption, but it also limits efficiency and scale. The UAE's strategy-building modular, interoperable links instead of betting on a single platform-shows a practical grasp of both the opportunities and the limits in cross-border payments in a world full of competing interests and regulatory risks.

Payment systems that cross borders have to deal with technical standards, sanctions, compliance, and political power. The UAE's story shows the trade-offs between efficiency, resilience, and control in international payments. As more countries look for ways around the dollar, the Emirates' changing role is a clear example of how payment infrastructure, regulatory risk, and geopolitics all come together in the modern currency world.