Could a BRICS Currency Challenge the Dollar?

A common BRICS currency — a single monetary unit shared by Brazil, Russia, India, China, South Africa and their growing circle of partner nations — is one of the most-discussed ideas in international finance. It has been floated by Russia's Vladimir Putin, debated at successive summits, and amplified by those who see a post-dollar world as imminent. The sober answer, after the 2024 Kazan summit, is: no common currency exists, none has been agreed, and the structural barriers to creating one are formidable. What BRICS has done is make incremental, genuine, but limited progress toward local-currency trade and alternative payment infrastructure.

What Is BRICS and How Has It Expanded?

BRICS began as an analytical label — coined by Goldman Sachs economist Jim O'Neill in 2001 — for the four large emerging economies of Brazil, Russia, India, and China. South Africa joined in 2010. The grouping became a formal intergovernmental forum and, over time, an explicit political counterweight to Western-led institutions.

At the 2023 Johannesburg summit, BRICS formally invited six new members. Four accepted: Iran, Egypt, Ethiopia, and the United Arab Emirates, all joining on 1 January 2024. Saudi Arabia was invited but has not confirmed full membership. At the October 2024 Kazan summit in Russia — the first full summit of the expanded bloc — a further category of "partner countries" was established. Nine nations (including Indonesia, Malaysia, Kazakhstan, Belarus, Bolivia, Cuba, Thailand, Uganda, and Uzbekistan) became BRICS partners from January 2025, giving the grouping a combined GDP that rivals the G7.

What Has BRICS Actually Proposed on Currency?

BRICS summit communiqués have discussed de-dollarization since at least 2019, but the proposals have been more modest than the headlines suggest.

At Kazan, the official Kazan Declaration endorsed three concrete initiatives:

1. Local-currency settlement Members are encouraged to use their own currencies for bilateral trade — a voluntary, non-binding commitment. Intra-BRICS local-currency trade has reportedly expanded sharply since Russia's exclusion from SWIFT.
2. BRICS Cross-Border Payments Initiative (BCBPI) A framework to strengthen correspondent banking networks within BRICS and enable local-currency settlement. Participation is explicitly "voluntary and non-binding" per the declaration.
3. BRICS Clear A study into whether BRICS could establish an independent cross-border settlement and depository infrastructure — a potential rival to SWIFT. Still at feasibility-study stage.

Russia's Putin, at Kazan, also proposed a "BRICS Bridge" — a payments infrastructure modelled on Project mBridge, the BIS-developed multi-CBDC platform that reached minimum viable product stage in mid-2024. mBridge involves the central banks of China, the UAE, Thailand, and Hong Kong, and allows real-time cross-border settlement in domestic digital currencies without converting through the dollar. Its transaction volume reached $55 billion by early 2026 — growing fast, but still a fraction of global FX settlement.

Notably, the BIS itself reportedly considered exiting the mBridge project in late 2024, in part because of concerns about its use by sanctioned parties and because the Kazan summit had framed it as a de-dollarization tool.

Why Is a BRICS Common Currency So Hard?

No Fiscal or Political Union

The eurozone's creation required decades of European integration, the Maastricht Treaty, convergence criteria, and the surrender of monetary sovereignty by member states. Even then, it required an implicit German fiscal backstop and an ECB with a single mandate. BRICS has none of this. The bloc has no common parliament, no shared fiscal authority, no agreed convergence criteria, and no mechanism for cross-border fiscal transfers. Without these foundations, a shared currency collapses when a member state hits an asymmetric shock — exactly the crisis the eurozone faced in 2010–2012.

China's Closed Capital Account

For a currency to function as a global reserve, it must be freely convertible and its financial markets must be deep, liquid, and open to foreign investors. Carnegie Endowment analysis has noted that China's capital account remains tightly managed: foreign investors face limits on buying Chinese bonds and equities, and the yuan's daily exchange rate is controlled by the People's Bank of China within a managed band. China itself appears uninterested in a common BRICS currency — it prefers to internationalise the renminbi on its own terms rather than dilute it into a bloc unit. As Carnegie put it, Beijing considers that "the renminbi is gradually becoming an international currency and that there is no point in participating in a new BRICS currency."

Intra-Bloc Rivalry and Lack of Trust

BRICS is not a cohesive alliance. India and China fought a border conflict in 2020 and maintain an unresolved territorial dispute. India has consistently signalled reluctance to deepen financial integration with China. Brazil and South Africa have expressed caution about any currency arrangement that might subordinate their monetary policy to Beijing's preferences. The Council on Foreign Relations notes that internal rivalries — especially India-China — are the deepest obstacle to bloc consolidation.

Divergent Economies

No monetary union can function with such divergent inflation regimes without a fiscal transfer mechanism. Member economies would require wildly different interest rates, but a single currency requires a single rate.

A Realistic Assessment

The BRICS de-dollarization agenda is real and deserves serious attention — but it is better understood as gradual, margin-level erosion of dollar dominance than a near-term replacement. Local-currency trade between Russia and China has expanded dramatically since 2022 sanctions. The yuan's share of Russian import settlement rose sharply. mBridge / BRICS Bridge could, over many years, reduce the friction cost of dollar-based clearing for intra-BRICS trade. These are genuine shifts.

But the dollar accounted for approximately 57–58% of global FX reserves in 2024 (IMF), with the euro a distant second at around 20% and the renminbi at just 2.2%. The IMF found no robust evidence of effective policy-driven dollar reduction in global oil export invoicing. The petrodollar system and the depth of dollar-denominated financial markets provide structural inertia that a payments initiative alone cannot dislodge.

For the broader structural case on why reserve-currency transitions take generations, see our post on reserve currencies explained. For the full de-dollarization debate, see de-dollarization explained.

What This Means for Currency Traders

BRICS de-dollarization is best understood as a slow-burning structural theme rather than a tradeable near-term catalyst. The practical impacts today are concentrated in two areas: commodity pricing and CNY cross-rates.

First, the expansion of yuan-settled commodity trades — particularly Russian and Iranian oil exports to China — has reduced the dollar's marginal role at the edges of global energy markets. This is one reason analysts watch the USD/CAD and other commodity pairs not just against the dollar but against the yuan-oil-complex. If Beijing were ever to mandate yuan settlement for a broader share of its crude imports, the structural demand for USD in oil markets would contract, a meaningful headwind for dollar strength.

Second, the mBridge / BRICS Bridge infrastructure is a genuine long-term experiment in reducing dollar-correspondent-banking friction. Its growth — transaction volume up 2,500-fold from early 2022 pilots to over $55 billion by 2026 — is real, but needs to be compared against the trillions settled daily through dollar-based SWIFT. The journey from "viable pilot" to "reserve-currency rival" is measured in decades.

For macro traders tracking the currency strength meter, the relevant signals remain the conventional ones: interest-rate differentials, current accounts, and risk appetite. BRICS political declarations move headlines but rarely move FX fundamentals in the short run. The dollar's structural dominance — reinforced by the depth of US capital markets, the petrodollar system, and the absence of a credible alternative with open capital accounts — means any meaningful shift in reserve-currency status would take many years and multiple structural reforms across BRICS economies.

Track how the currencies of BRICS major members — from the US dollar to the euro — are performing in real time on the Pip Theory macro currency strength meter.

Educational macro context only — not investment advice.