BRICs currencies fail to serve as practical alternatives to the U.S. dollar

BRICs currencies fail to serve as practical alternatives to the U.S. dollar

In a bid to reduce their reliance on the US dollar, the BRICS bloc — comprising Brazil, Russia, India, China, and South Africa — is actively exploring various avenues to challenge the greenback's dominance in global finance.

One significant development is the increased use of national currencies in intra-BRICS trade. The renminbi, China's currency, is already being used in about 50% of intra-BRICS trade, marking a substantial increase from its 2% share in global payments as of May 2025. Other BRICS currencies are also being promoted for bilateral transactions [4].

BRICS countries have also been developing alternative cross-border payment systems. The BRICSBridge system, for instance, connects their central bank digital currencies (CBDCs), allowing near-instant settlement of cross-border payments at much lower costs. This infrastructure bypasses the Western-controlled SWIFT system and limits exposure to Western sanctions [1].

Discussions are ongoing about creating a new BRICS common currency, potentially backed by a basket of member currencies or gold, or a blockchain-based digital currency known as the "Unit." However, this remains a developing prospect and has not yet materialized into a widely accepted vehicle currency [3].

Despite these initiatives, the US dollar still dominates global finance. It remains the counterpart in about 88-90% of all foreign exchange transactions and holds around 59% of central bank reserves worldwide, though this is down from historical highs [2][5]. Major cross-border financial markets and commodity pricing still largely rely on the dollar [4].

The future may see a more multipolar currency landscape, with coexistence rather than outright replacement of the dollar. The advantages of the dollar's status as the global currency are undeniable, but its well-known drawbacks, such as control by one government and the need for conversion twice, are also evident.

Academics and politicians are driving the discussion about de-dollarisation, while financial markets await a viable alternative to the dollar. However, the previous Brics Pay initiative was a hoax, and the present suggestion of XRP as a vehicle currency is a cryptocurrency, abhorred by countries like China.

The next BIS triennial survey was conducted in April of this year, with results to be published later in the year. Global banks, corporations, and investors are the major players in interbank and money markets, stock and bond markets, and derivatives markets.

In 2024, cross-border trade in goods and services totalled some $33tn, about one third of global gross domestic product. The article is part of OMFIF's second edition of The Bulletin this year, publishing on 29 July.

Notable contributors to this discussion include Gary Smith and Udaibir Das from OMFIF, who argue that a new BRICS financial governance is highly unlikely. Herbert Poenisch, Senior Research Fellow at Zhejiang University, is another key figure in this ongoing discourse.

As emerging economies become more assertive, and the US reneges on its role as provider of the global currency, discussions about de-dollarisation are likely to continue. The US authorities' benign attitude towards the world using the dollar as the sole international money has made this possible, but the changing geopolitical landscape may soon challenge this status quo.

1. Academics and politicians within the BRICS bloc are actively driving discussions about de-dollarization, seeking alternatives to challenge the US dollar's dominance in global finance.
2. One of the emerging avenues for transitional trade within the BRICS bloc is the increased use of national currencies, with the renminbi already being utilized in about 50% of intra-BRICS trade.
3. Researchers like Herbert Poenisch, Senior Research Fellow at Zhejiang University, are integral figures in this ongoing discourse, indicating that a new BRICS financial governance is highly unlikely.
4. AI and blockchain technologies are being considered in the development of alternative cross-border payment systems, such as the "Unit," a blockchain-based digital currency proposed by some BRICS members.
5. Despite these efforts, the US dollar still maintains a significant position in global finance, making up around 88-90% of all foreign exchange transactions and holding approximately 59% of central bank reserves worldwide.

Read also: