For decades, the U.S. dollar has sat at the center of the global financial system. It dominates trade invoicing, commodity pricing, foreign-exchange reserves, and cross-border finance. But in recent years, a growing group of emerging economies has begun to question that dominance. At the heart of this debate is a provocative idea: a BRICS currency.
The BRICS grouping—Brazil, Russia, India, China, South Africa, and newly admitted members—represents a large share of the world’s population, output, and commodity supply. Calls for reducing reliance on the dollar have intensified amid geopolitical tensions, sanctions, and shifting global power balances. Some policymakers and commentators suggest that a BRICS-backed currency, or settlement mechanism, could eventually rival the dollar.
But can it really?
This article examines what a “BRICS currency” actually means, why the idea has gained traction, the latest economic realities shaping the debate, and whether such a currency could realistically challenge the dollar’s dominance—or whether it remains more political signal than monetary revolution.
What People Mean by “BRICS Currency”
Despite frequent headlines, there is no single, agreed-upon blueprint for a BRICS currency. The term is used to describe several different ideas:
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A common BRICS unit of account used for trade settlement
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A digital or clearing-based currency for cross-border payments
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A commodity-backed settlement mechanism
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Greater use of local currencies in bilateral trade, sometimes mislabeled as a “common currency”
Each of these is very different in design, feasibility, and impact. Importantly, none implies an imminent replacement of national currencies or the creation of a BRICS central bank comparable to the U.S. Federal Reserve or the European Central Bank.
Understanding this distinction is critical. Much of the hype around a “BRICS currency” conflates de-dollarization efforts with the creation of a true reserve currency.
Why the Dollar Dominates in the First Place
To assess whether the dollar can be challenged, we must understand why it dominates.
The dollar’s role is not just a product of U.S. power; it is the result of structural advantages:
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Deep, liquid financial markets
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Open capital accounts
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Strong legal protections for investors
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Credible monetary institutions
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Large supply of safe assets (U.S. Treasuries)
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Network effects—everyone uses it because everyone else does
As of the mid-2020s:
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The dollar accounts for around 85–90% of global FX transactions
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Roughly 60% of global foreign-exchange reserves
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The majority of global trade invoicing, especially for commodities
This dominance is self-reinforcing. Any challenger must replicate not just size, but trust, liquidity, convertibility, and legal predictability.
Why the BRICS Are Pushing Back
The push for alternatives to the dollar is driven by both economic and geopolitical motivations.
1. Sanctions and Financial Power
Sanctions on Russia highlighted how access to dollar-based systems can be restricted. This has encouraged some countries to seek insulation from U.S.-led financial infrastructure.
2. Reduced Currency Risk
Trade settled in dollars exposes exporters and importers to dollar volatility. Using local currencies can reduce FX risk for bilateral trade.
3. Strategic Autonomy
Some BRICS members see reduced dollar reliance as part of a broader effort to rebalance global governance and financial influence.
4. Changing Global Trade Patterns
Trade between emerging economies has grown significantly. The logic follows: if trade patterns diversify, currency usage should too.
These motivations are real—but motivation alone does not create a reserve currency.
What Has Actually Changed So Far
Despite strong rhetoric, actual de-dollarization has been gradual and limited.
Recent developments include:
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Increased bilateral trade settlement in local currencies
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Currency swap agreements between central banks
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Exploration of alternative payment systems
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Discussion of a BRICS settlement unit
However:
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The dollar remains dominant in global reserves
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Most BRICS trade with the world (not just each other) still uses dollars
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Capital controls remain widespread among BRICS economies
In other words, usage at the margin has shifted, but the system has not transformed.
The Core Problem: A Currency Needs Trust, Not Just Size
A true reserve currency must satisfy demanding criteria:
Convertibility
Investors must be able to move capital freely in and out. Several BRICS members maintain capital controls that limit this.
Stability
Reserve holders want low inflation, predictable policy, and minimal political interference.
Rule of Law
Contracts must be enforceable, property rights respected, and courts independent.
Safe Assets
There must be a large, liquid market in government bonds considered virtually risk-free.
Political Neutrality
Reserve currencies benefit from being perceived as politically predictable, even during crises.
This is where the BRICS currency idea faces its biggest challenge.
Internal BRICS Contradictions
The BRICS are not a unified economic bloc.
Key differences include:
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Divergent political systems
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Different inflation histories
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Varying capital-account openness
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Competing geopolitical interests
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Asymmetric economic power (China is far larger than others)
These differences make monetary coordination extremely difficult.
A shared currency or reserve unit would require:
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Agreement on governance
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Rules for issuance
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Crisis management mechanisms
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Dispute resolution frameworks
The euro required decades of integration, shared institutions, and deep political alignment—and even then faced major crises. The BRICS lack that level of integration.
The China Question
Any realistic BRICS currency would be dominated by China.
China is:
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The largest economy in the group
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The largest trader
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The only BRICS country with near-reserve-scale financial depth
But this creates a paradox.
A BRICS currency dominated by China would require:
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Greater openness of China’s capital account
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Reduced state control over finance
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Greater legal transparency
These changes conflict with China’s existing financial model. As a result, China has preferred controlled internationalization of its own currency rather than full liberalization.
This limits how far any BRICS monetary alternative can go.
Commodity Backing: A Popular but Flawed Idea
Some proposals suggest backing a BRICS currency with commodities such as gold or oil.
While appealing rhetorically, commodity backing has problems:
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Commodity prices are volatile
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Supply shocks create instability
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Convertibility constraints limit flexibility
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Modern trade requires elastic liquidity, not fixed backing
Historically, rigid commodity backing has made currencies less adaptable during crises. Modern reserve currencies rely on institutional credibility, not metal.
Digital Currency and Settlement Systems
A more realistic path is not a single currency, but alternative settlement infrastructure.
Possibilities include:
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Digital settlement units for trade
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Multilateral clearing systems
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Interlinked central bank digital currencies
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Reduced reliance on correspondent banking
These systems could:
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Lower transaction costs
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Reduce settlement risk
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Bypass some dollar-based rails
However, they still do not replace:
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Reserve holdings
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Safe-asset demand
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Dollar-denominated capital markets
This is evolution, not revolution.
What the Latest Data Suggests
As of early 2026:
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Dollar share of reserves has declined slightly, but remains dominant
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Local-currency trade among BRICS has increased, but from a low base
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The dollar remains the primary currency in global debt issuance
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Global investors continue to seek U.S. assets during crises
This behavior reveals a key truth: when risk rises, the dollar still benefits.
Can the Dollar Be Weakened Without Being Replaced?
Yes—and this is the most likely outcome.
The future may involve:
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A less dominant dollar, but still the primary anchor
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Greater use of regional currencies
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More fragmented payment systems
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Increased bilateral trade settlement
This is multipolarity, not displacement.
The dollar does not need to disappear for its share to decline gradually.
What Would It Take to Truly Challenge the Dollar?
For a BRICS currency to rival the dollar, the following would need to happen simultaneously:
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Full capital account openness
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Deep, liquid bond markets
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Independent monetary governance
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Legal and political predictability
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Crisis-tested institutions
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Broad international trust
At present, this alignment does not exist.
Implications for Investors and Policymakers
For investors:
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Dollar dominance is not ending abruptly
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Currency diversification still matters
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Geopolitical risk affects FX more than rhetoric
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Liquidity and trust trump ideology
For policymakers:
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Financial credibility is earned slowly
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De-dollarization is a long process, not an announcement
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Institutional quality matters more than coordination slogans
The Symbolism vs the Reality
The BRICS currency discussion is powerful politically, but limited economically.
It signals:
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Dissatisfaction with the current system
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Desire for greater autonomy
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Long-term pressure on dollar dominance
But symbolism should not be mistaken for readiness.
Conclusion: Challenge, Yes—Replacement, No
The idea of a BRICS currency captures a real shift in global thinking. The world is becoming more multipolar, trade patterns are evolving, and reliance on a single currency carries risks.
However, challenging the dollar is not the same as replacing it.
In the foreseeable future, the dollar will remain the world’s primary reserve currency—not because it is perfect, but because no alternative offers the same combination of scale, liquidity, trust, and institutional depth.
The BRICS can reduce dollar usage at the margins. They can build alternatives. They can diversify risk.
But a true rival to the dollar requires more than shared ambition. It requires shared institutions—and that remains the missing piece.
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