BRICS has kept its campaign to reduce reliance on the US dollar alive, but the bloc is taking a far more cautious and practical route than the creation of a shared currency once envisioned by some members.
Following the group’s latest summit in New Delhi, leaders avoided committing to a common BRICS currency and instead focused on expanding the use of national currencies, improving cross-border payment systems and strengthening financial cooperation.
The shift suggests that BRICS is pursuing de-dollarisation gradually rather than attempting to replace the US dollar with a single alternative overnight.
No common currency in sight
Expectations that BRICS could announce a common currency have circulated for years, particularly as the group expanded and tensions with the United States intensified.
But the latest summit produced no agreement to create one.
Instead, the bloc endorsed measures designed to make trade between member states easier without relying on the dollar for every transaction.
That includes greater use of local currencies for trade and investment and continued work on connecting members’ payment systems.
Analysts say the approach is more realistic because a common currency would require far deeper economic and monetary integration than currently exists among BRICS members.
Local currencies become the practical alternative
The New Delhi declaration placed greater emphasis on national currencies rather than a single BRICS unit.
The objective is straightforward: if companies in member countries can settle more transactions directly in yuan, rupees, rubles, reais, dirhams and other local currencies, fewer transactions need to pass through the US dollar.
That could reduce foreign-exchange costs for businesses and limit their exposure to disruptions in dollar-based payment channels.
It could also give countries facing US sanctions more options for conducting international trade.
For BRICS, the strategy is therefore less about replacing the dollar immediately and more about creating additional routes around it.
Payment systems take centre stage
One of the most important parts of the strategy is improving cross-border payments.
The BRICS Payment Task Force is continuing to explore ways to make member countries’ payment networks more interoperable.
A more integrated payment infrastructure could allow banks and companies to settle transactions directly between participating countries without depending as heavily on traditional Western financial networks.
That would give BRICS members greater flexibility while potentially reducing transaction costs.
The approach is also easier to implement than establishing a new currency because individual countries can continue using their existing monetary systems.
China and Russia have strong incentives
China and Russia have particularly strong reasons to support alternatives to dollar-based transactions.
China has spent years encouraging the international use of the yuan and expanding cross-border settlement in its currency.
Russia, meanwhile, has faced extensive Western sanctions that have restricted its access to parts of the global financial system.
Other BRICS members have different motivations.
India, for example, has an interest in expanding the international role of the rupee while maintaining flexibility in its relations with both Western and non-Western economies.
This diversity of interests makes a single BRICS currency difficult, but it also creates incentives for individual members to expand the use of their own currencies.
A common currency would be far more complicated
Creating a shared currency would require BRICS members to resolve major differences in monetary policy, inflation, interest rates, exchange-rate regimes and capital controls.
The bloc also contains economies at very different stages of development.
China’s economy is vastly larger than that of many other members, while India has its own monetary and financial priorities.
Members also have competing geopolitical interests.
China and India, for example, have significant strategic and economic ties but remain geopolitical rivals in several areas.
Those differences make the creation of a currency comparable to the euro an extremely difficult undertaking.
BRICS is choosing gradual change
The absence of a common currency does not necessarily mean the group’s de-dollarisation ambitions have failed.
Instead, analysts see the latest approach as a more pragmatic strategy.
Rather than attempting to build an entirely new monetary system, BRICS can gradually increase the share of trade settled in local currencies, improve payment links and expand lending in national currencies.
The New Development Bank is also being encouraged to increase its use of local currencies in financing.
These steps may appear less dramatic than launching a new currency, but they could have a more immediate practical effect.
The dollar remains difficult to displace
Despite the BRICS push, replacing the US dollar remains a formidable challenge.
The dollar continues to dominate major areas of international finance, including global payments, foreign-exchange markets, trade invoicing and central-bank reserves.
Many BRICS members also continue to hold substantial dollar assets and use the US currency extensively in international commerce.
That means reducing dollar dependence does not necessarily translate into abandoning the dollar.
For many countries, maintaining access to dollar markets while developing alternative payment channels is a more attractive strategy than attempting a complete financial break.
Internal divisions remain a major obstacle
BRICS has also become more complicated as its membership has expanded.
The bloc now includes countries with different economic models, political priorities and relationships with the United States.
Some members want a stronger challenge to the Western-dominated financial system, while others are more interested in reducing transaction costs and gaining greater financial flexibility.
That makes consensus on ambitious initiatives difficult.
The latest summit therefore avoided the kind of dramatic monetary announcement that could have triggered stronger divisions within the group.
A slower challenge to dollar dominance
The significance of the latest BRICS strategy may ultimately lie in what happens outside the headlines.
If members increasingly settle bilateral trade in their own currencies, expand local-currency lending and connect payment systems, the cumulative effect could gradually reduce the dollar’s role in some areas of emerging-market trade.
It would not immediately threaten the dollar’s position as the world’s dominant international currency.
But it could create a more fragmented global financial system in which businesses and governments have more alternatives.
For BRICS, that may be the more achievable goal.
The bloc has effectively moved away from the idea of replacing the dollar with a single BRICS currency and toward building a network of alternatives around it.
The result is a slower, less dramatic form of de-dollarisation — but one that analysts say may ultimately be more realistic and sustainable.
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