For over eight decades, the U.S. dollar has held a dominant position as the world’s leading reserve currency, shaping global finance under the mantle of US dollar hegemony. However, an emerging alliance of nations under the BRICS banner—Brazil, Russia, India, China, and South Africa—is not just questioning this supremacy but actively seeking to reshape the international financial structure, making it less reliant on the greenback. The 2024 BRICS summit was a testament to this determination, as it heavily focused on exploring pathways to a multipolar world in currency and trade.
At the summit in Johannesburg, Russian President Vladimir Putin declared that the momentum toward “de-dollarization” is both “irreversible” and accelerating. BRICS leaders, including Brazilian President Luiz Inacio Lula da Silva, emphasised the need for options beyond the dollar—a sentiment resonating with developing economies across the Global South as they seek independence from the dollar-centric system.
Economic Sanctions and Rising Interest Rates Spur De-Dollarization
The push for alternatives is not new, but recent geopolitical developments have intensified this drive. Economic sanctions against Russia over the Ukraine conflict, including freezing foreign reserves and limitations on SWIFT access, spotlighted the vulnerabilities inherent in dollar dependency. China, too, has faced sanctions through restrictions on semiconductor exports, which further motivates Beijing to secure its global financial stance through other means, including boosting renminbi influence.
“The US’s weaponisation of the dollar in sanctions has triggered a wave of interest in alternative currencies for trade and investment,” said Shirley Ze Yu, a senior visiting fellow at the London School of Economics. Rising U.S. interest rates, which have escalated the cost of dollar-denominated debt for developing nations, have added urgency to the search for other currencies, particularly for countries like Brazil and South Africa.
Could a BRICS Common Currency Become a Reality? Experts Express Doubt
Some speculate that BRICS+ members, which could potentially include other emerging economies, might introduce a shared currency as an alternative to the dollar. A proposed BRICS common currency pegged to a basket of BRICS-member currencies or gold has captured the imagination, but experts remain sceptical.
Gustavo de Carvalho, a South African Institute of International Affairs policy analyst, described the currency as a “long-term goal at best.” According to Danny Bradlow, a professor at the University of Pretoria, a BRICS currency would require extensive institutional support and common economic values—challenging to achieve given the diverse economic landscapes of BRICS countries. Chris Weafer, a strategic analyst, argued that such a currency could end up dominated by China’s massive economy, making smaller economies hesitant to relinquish their monetary autonomy. These potential challenges underscore the complexity of the de-dollarization process.
Local Currencies Gain Traction in Bilateral Trade
For now, BRICS is promoting local currencies in bilateral trade. Russia and China, for instance, now primarily trade in rubles or yuan, and India and the UAE have begun to settle transactions in rupees. This move offers some protection from dollar dependency but introduces practical challenges, such as limited currency convertibility.
“The use of local currencies is promising but challenging,” said Weafer. “Each country would need to hold reserves in their partner’s currency, and challenges like India’s capital controls make this difficult.” This complexity underscores the appeal of a more integrated BRICS financial system while highlighting the existing barriers.
Dollar to Remain King—For Now
Despite these efforts, experts agree that dethroning the dollar will be a long journey. Weafer estimates that any serious challenge to the dollar’s dominance remains “decades away.” Even if BRICS+ adopts a shared currency, it will face significant competition from the dollar, which remains the benchmark for global commodities.
South African BRICS ambassador Anil Sooklal emphasised that BRICS does not aim to replace the dollar but offers alternative options. The Pan-African Payment and Settlement System, which facilitates trade within Africa outside of SWIFT, is an example of the multipolar vision BRICS leaders advocate for.
While the BRICS expansion continues to build momentum, the dollar’s liquidity and established infrastructure keep it firmly at the centre of global finance. The drive for a multipolar system may be underway. However, meaningful shifts away from the dollar will likely unfold gradually, over a long period of time. The greenback will maintain its influential role in the foreseeable future, and any significant challenge to its dominance remains ‘decades away.’
