BRICS seeks gradual shift from dollar to local currencies

The idea of a BRICS currency, as part of a de-dollarisation move, has drawn widespread attention since the Brazilian President mooted a common currency at the 2023 BRICS summit. The BRICS summit held in 2025 in Rio de Janeiro, Brazil, also emphasised the need for a common currency to reduce dependence on the US dollar in international trade, commerce, and cross-border payments.
The recently concluded New Delhi summit also underscored the importance but unanimously decided that moving away from the dollar will be a gradual process rather than an abrupt move away from the existing international monetary order.
The dollar’s dominance is not new. It remains the principal currency for global reserves, trade, finance and investment. Deep and liquid financial markets, large dollar-denominated assets, robust banking and payment networks, and the confidence of international investors have together created an ecosystem that is exceptionally difficult to replicate.
Countries use the dollar because their trading partners, banks and investors use it. Even transactions between countries with limited economic links to the United States are often invoiced and settled in dollars. This widespread use, in turn, strengthens the currency’s international role.
Yet there are growing reasons to diversify. The expanding use of financial sanctions by the US administration has prompted several countries to explore alternatives to the dollar-based financial system.
The recent US move to tighten sanctions on Russia and Iran has also added to concerns in countries like India with higher tariffs. The sanctions and punitive actions on countries are creating uncertainties and disruptions in global trade. Therefore, greater use of national currencies could help reduce exposure to the dollar dependence. Alternative payment mechanisms could also reduce dependence on Western financial infrastructure, including the SWIFT network.
A currency does not become an international transaction currency just because a country pushes it. It requires broad convertibility, deep and liquid financial markets, reliable settlement mechanisms, credible institutions and, above all, the confidence of global investors. Here comes the biggest hurdles for BRICS and its allies.
The members have different inflation rates, monetary policies, exchange rate regimes, capital controls, economic structures and fiscal priorities, besides their geopolitical interests.
China’s Renminbi (RMB) might appear to be an option for a larger international role, given the size of the Chinese economy and its larger role in global trade. However, replacing the dollar with another dominant currency would make no difference. It could simply shift dependence from one major currency to another.
Again, another issue is that global investors must be able to hold assets denominated in the ‘currency concerned’ over the long term, with confidence that those assets can be bought, sold and repatriated efficiently. The depth, openness and liquidity of financial markets therefore matter as much as the size of an economy.
The BRICS Delhi declaration appears to have recognised these constraints. The US dollar has dominated the international monetary system for decades because of the depth and liquidity of the US financial markets, the huge volume of dollar-denominated assets, and its widespread use in global trade and commodity pricing.
Recreating an ecosystem like this would take years. The BRICS New Delhi summit has understood this challenge clearly and advocated a more realistic approach to increase the use of local currencies where commercially viable, rather than attempt an immediate replacement of the dollar.
Greater settlement in national currencies, combined with the development and eventual interoperability of alternative payment systems, could gradually reshape the international payments landscape. India’s UPI, Brazil’s Pix, Russia’s SPFS and China’s CIPS represent different components of this emerging infrastructure. The New Development Bank (NDB), established by BRICS, could also play a larger role in financing infrastructure and development projects in emerging and developing economies, particularly if lending and settlement in local currencies expand.
De-dollarisation is likely to be a gradual and long-term process. Over time, BRICS could contribute to a more diversified international financial system, giving countries greater flexibility in how they conduct trade, settle payments and finance development.
The New Delhi summit message reflected a pragmatic approach, emphasising the interoperability of local-currency payment systems rather than outright de-dollarisation. The gradual expansion of local-currency settlements, alternative payment networks and new sources of development finance could, over time, reduce the global financial system’s dependence on a single currency. While de-dollarisation may remain a long-term possibility, the more tangible trend for now is toward greater monetary diversification.