BRICS currencies fall short as feasible replacements for the US dollar
The ongoing discussions about de-dollarisation have not significantly impacted the lion's share of cross-border financial transactions, which continue to be conducted primarily in major currencies, such as the dollar. This is evident in the current status of de-dollarisation efforts among BRICS countries.
In a recent article published by OMFIF on 29 July, the progress and dynamics of de-dollarisation in BRICS countries were examined. The expanded BRICS grouping, now comprising ten members, has discussed the creation of a new currency backed by a basket of member currencies, referred to as the "Unit." However, no official implementation or launch has taken place yet.
At the 2024 BRICS summit, the focus was on developing alternatives to the US dollar's "weaponization" and facilitating the use of local currencies for trade settlement among BRICS countries and partners. The use of multiple national currencies, particularly the Chinese renminbi, has begun to emerge in settling cross-border payments, with the renminbi reportedly accounting for about 50% of intra-BRICS trade settlements.
Despite these advances, major challenges remain. The lack of a vehicle currency or clearing institution comparable to Europe's post-WWII Payments Union is a significant obstacle. Past initiatives like BRICS Pay have failed, and proposed cryptocurrencies such as XRP face resistance from key members like China.
As of mid-2025, a fully established unified BRICS currency or a comprehensive replacement for the US dollar in global transactions has not been established. The US dollar remains dominant in global finance, especially in cross-border financial transactions, with the global foreign exchange market worth $7.5 trillion a day.
In summary, BRICS countries are actively pursuing incremental de-dollarisation through local currency trade and alternative systems development. While this represents a significant strategic shift and could lay the foundations for a multipolar currency future, a viable, scalable alternative to the US dollar for global transactions is not yet in place. The financial markets are waiting for a viable alternative to the dollar, while academics and politicians continue to drive the discussion about de-dollarisation.
- The ongoing pursuit of de-dollarisation among BRICS countries involves emerging strategies like using local currencies for trade settlement and developing alternatives to the US dollar.
- Despite the emergence of multiple national currencies in settling cross-border payments, particularly the Chinese renminbi, there is a risk that a viable, scalable alternative to the US dollar for global transactions has not been established.
- The progress in de-dollarisation research and AI-based financial governance insights highlights the need for a sovereign vehicle currency or clearing institution to compete with Europe's post-WWII Payments Union.
- The failure of previous initiatives, such as BRICS Pay and the resistance to proposed cryptocurrencies like XRP, underscores the risks associated with the de-dollarisation efforts and the need for innovative solutions.
- As the financial markets continue to rely on the US dollar, mainly in cross-border financial transactions, there is a pressing need for business leaders and policymakers to navigate the risks and challenges involved in the de-dollarisation process to achieve a multipolar currency future.
