BRICS TO REPLACE DOLLAR

Last updated: June 19, 2025, 20:11 | Written by: Joseph Lubin

For decades, the US dollar has reigned supreme as the world's reserve currency, facilitating international trade and investment.However, the rise of the BRICS nations – Brazil, Russia, India, China, and South Africa – has sparked a global conversation: Could the BRICS nations replace the dollar's dominance?Fueling this discussion are growing concerns about the dollar's weaponization through sanctions, its vulnerability to devaluation, and the perceived inequities of a global financial system heavily reliant on a single currency.Calls for de-dollarization are growing louder, with BRICS members actively exploring alternative payment systems and even the possibility of a common currency. BRICS members are looking to create a new digital currency. central banks purchased a record 1,136 tonnes of gold last year to reduce their reliance on the U.S. dollar. Gold reserves willThis isn't just a theoretical debate; it's a potential shift in the global power dynamic with significant implications for economies worldwide. And while BRICS may have the desire to build a new international financial system, the global economy that has allowed the emerging markets to emerge over the last 25 years was built on the dollar.But is a BRICS currency a realistic prospect?What hurdles stand in its way, and what could the consequences be for the US and the global financial order? Jan 30 (Reuters) - President Donald Trump on Thursday warned off BRICS member countries from replacing the U.S. dollar as a reserve currency by repeating a 100%-tariffs threat he had made weeksIn this comprehensive analysis, we'll delve into the heart of this complex issue, examining the motivations, challenges, and potential outcomes of the BRICS' quest to challenge the dollar's long-held supremacy. This month, the BRICS nations will meet to discuss, among other matters, a new currency that will rival the US dollar as the global reserve standard (Wu Hong/AFP via Getty Images) During the 2025 BRICS summit, Russian President Vladimir Putin announced that the bloc was working to create an international reserve currency . This will againThe topic of BRICS replace dollar is certainly a hot one.

The Push for De-Dollarization: Why Are BRICS Nations Seeking Alternatives?

The motivation behind the BRICS' desire to move away from the dollar is multifaceted, stemming from a combination of economic and geopolitical factors.Several reasons are worth exploring further.

Reducing Vulnerability to US Sanctions: Perhaps the most pressing concern is the increasing use of the dollar as a tool for political leverage. We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar orCountries facing US sanctions find themselves cut off from the global financial system, severely impacting their economies.A BRICS currency would allow member nations to bypass the dollar in trade transactions entirely.
Insulating Against Dollar Devaluation: The value of the dollar can fluctuate significantly, impacting the purchasing power of countries holding large dollar reserves. President Donald Trump on Thursday warned off BRICS member countries from replacing the US dollar as a reserve currency by repeating a 100%-tariffs threat he had made weeks after winning the November presidential elections.A BRICS currency could offer a more stable alternative, protecting member economies from the volatility of the dollar.
Challenging US Dominance: The US dollar's status as the reserve currency gives the US significant economic and political power. There is no chance that Brics will replace the US dollar in international trade, or anywhere else, and any country that tries should say hello to tariffs, and goodbye to America!The establishment of a competing currency would serve as a symbol of BRICS' commitment to a more multipolar world order, reducing the dominance of the US-based financial system and providing a more equitable foundation for global trade.
Facilitating Trade Among Member Nations: A common currency could streamline trade and investment between BRICS countries, reducing transaction costs and promoting economic integration.

The Role of US Foreign Policy

The US's foreign policy choices, particularly its assertive use of sanctions, have inadvertently fueled the desire for a dollar alternative.As Washington expands its use of sanctions, countries seeking flexible trade and investment across borders will need a reserve currency that competes with or replaces the dollar.

A BRICS Currency: What Would It Look Like?

The exact form a BRICS currency might take remains a subject of much speculation. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, andSeveral proposals have been floated, each with its own set of advantages and disadvantages.Let's explore the options:

A Common Currency: Similar to the Eurozone, this would involve the creation of a single currency used by all BRICS member states.This would require a high degree of economic coordination and political integration, which could be challenging given the diverse economic structures and political systems of the BRICS nations.
A Basket Currency: This would involve creating a unit of account based on a weighted average of the currencies of the BRICS nations. A BRICS currency would provide a powerful alternative to the US dollar, enabling member nations to bypass the dollar in trade transactions entirely. This potential currency could serve as a symbol of BRICS commitment to reducing the dominance of the US-based financial system and provide a more equitable foundation for global trade.This could provide a more stable value than a single currency and would require less economic coordination.
A Digital Currency: Leveraging blockchain technology, a digital BRICS currency could facilitate cross-border transactions quickly and efficiently.However, this would also raise regulatory and security concerns.

The BRICS Bridge Payment System

Beyond a common currency, the BRICS nations are also developing alternative payment systems, such as the ""BRICS Bridge,"" to facilitate cross-border transactions without relying on the SWIFT system, which is heavily influenced by the US.

The Challenges of Replacing the Dollar

While the idea of a BRICS currency is gaining traction, significant hurdles stand in the way of its realization.Overcoming these challenges is crucial if the BRICS nations hope to truly challenge the dollar's dominance. As the BRICS bloc expands, efforts by BRICS policymakers to increase global use of non-dollar currencies particularly the Chinese renminbi are accelerating. Washington should take note of how frustrations with the dollar are helping enable the rise of the renminbi in emerging markets and motivating strategic partners like India to push for greater use of non-dollar currencies.Replacing the dollar is no easy task.

Lack of a Unified Financial System: The BRICS nations have diverse financial systems with varying levels of development and integration. Will BRICS ever replace the U.S. dollar? While BRICS nations discuss reducing dollar reliance, replacing it is unlikely anytime soon due to their reliance on U.S. markets, lack of a unified financial system, and China s reluctance to globalize the yuan. How do BRICS countries benefit from the U.S. dollar?Creating a unified financial system that can support a common currency will require significant reforms and harmonization.
Economic Disparities: The BRICS nations have vastly different economic structures and levels of development.Balancing the interests of these diverse economies will be a major challenge.
China's Reluctance to Globalize the Yuan: While China is a key driver of the BRICS initiative, it has been hesitant to fully globalize its currency, the Yuan. US President Donald Trump has threatened BRICS nations with 100% tariffs if they replace the US dollar as reserve currency. He has also threatened Canada and Mexico with tariffs.This reluctance could hinder the development of a BRICS currency.
Establishing International Trust: For a BRICS currency to gain widespread acceptance, it needs to be seen as a credible and stable alternative to the dollar.Building this trust will require strong institutions, sound monetary policies, and a commitment to transparency.

Political Obstacles

Beyond the technical and economic challenges, political obstacles also exist. The BRICS collective, comprising Brazil, Russia, India, China and South Africa, is working on a common currency in an attempt to ditch the US dollar and push back against America s dominance. The move comes as Moscow and Beijing call for de-dollarisation in the face of Western sanctionsSome BRICS nations may be hesitant to cede sovereignty over their monetary policies to a common BRICS institution. Preview. The BRICs concept was launched as a financial sector grouping of the then-major emerging market economies which were expected to grow faster than the Group of Seven or G7 economies. 1 The thesis was that as the BRICs economies grew quickly over the decade to 2025, their impact on the global economy and their fiscal policy would become increasingly important. 2 The leadersFurthermore, the US is likely to resist any attempt to undermine the dollar's dominance.

The Role of China and the Renminbi (Yuan)

China's economic power and its desire to internationalize the Renminbi (RMB) make it a key player in the BRICS' quest to challenge the dollar. Last year, Trump responded by threatening to impose 100% tariffs on BRICS nations if they attempted to bypass or replace the U.S. dollar in international trade. He firmly stated that the U.S. would not permit BRICS countries to introduce a new currency or endorse any alternative for global transactions.The RMB is increasingly being used in international trade and investment, particularly in emerging markets.As the BRICS bloc expands, efforts by BRICS policymakers to increase global use of non-dollar currencies, particularly the Chinese RMB, are accelerating.

The Potential for the RMB to Become a Reserve Currency

While the RMB still has a long way to go before it can rival the dollar, its growing use in international transactions suggests that it could become a more significant reserve currency in the future.The BRICS initiative could accelerate this process by promoting the RMB as an alternative to the dollar.

The Global Impact of a BRICS Currency

The emergence of a BRICS currency could have far-reaching implications for the global economy.The impact is not entirely clear, however.Here are some potential consequences:

Reduced Dependence on the US Dollar: A BRICS currency could reduce the world's reliance on the US dollar, leading to a more multipolar financial system.
Increased Trade Among BRICS Nations: A common currency could boost trade and investment between BRICS countries, leading to faster economic growth.
Shift in Global Power Dynamics: The rise of a BRICS currency could shift the balance of economic and political power away from the US and towards the BRICS nations.
Potential Instability: The transition to a new global currency regime could be disruptive and could lead to financial instability if not managed carefully.

Impact on the United States

The emergence of a credible alternative to the dollar could have a significant impact on the US economy.A decline in demand for the dollar could lead to higher interest rates and a weaker dollar, making it more expensive for the US to borrow money and potentially reducing its economic competitiveness.

Donald Trump's Response and Potential Trade Wars

The prospect of BRICS replacing the dollar has not gone unnoticed in the United States.Former President Donald Trump has repeatedly warned BRICS nations against attempting to bypass or replace the US dollar in international trade.He even threatened to impose 100% tariffs on BRICS nations if they introduced a new currency or endorsed any alternative for global transactions.Such a move would undoubtedly escalate trade tensions and could lead to a global trade war.

The Risk of Protectionism

Trump's protectionist stance highlights the potential for political conflict arising from the BRICS' efforts to challenge the dollar's dominance. To insulate themselves from dollar devaluation, dollar weaponization and the financial instabilities inherent in the dollar-based global financial system. In the days and weeks leading up to the BRICS 2025 summit in Rio de Janeiro, I ll share the insights collected from all my research.The US may use its economic and political power to discourage other countries from adopting a BRICS currency.

Gold as an Alternative: Central Banks Diversify

In recent years, central banks around the world have been increasing their gold reserves, a move seen as a way to diversify away from the US dollar.Last year, central banks purchased a record amount of gold, signaling a growing desire to reduce reliance on the dollar.

The Appeal of Gold

Gold is often seen as a safe haven asset, particularly during times of economic uncertainty. The obstacles are numerous, particularly regarding governance, currency stabilization, and establishing sufficient international trust. These structural challenges reinforce the idea that, despite its promises, a BRICS currency cannot currently claim to replace the dollar but could, in time, gradually reshape global monetary balances.Its limited supply and historical role as a store of value make it an attractive alternative to fiat currencies like the dollar.

Is a BRICS Currency Inevitable?A Realistic Timeline

While the idea of a BRICS currency is gaining momentum, it's important to be realistic about the timeline. Lavrov pointed out that BRICS is developing a payment system that will enable all countries to carry out trade transactions without the use of dollars, which would weaken the American currency. Transactions will be possible in local currencies, and the new system will not include the US dollar in any form, reports Investor.Replacing the dollar is a long-term process that will require significant effort and cooperation from the BRICS nations. Will BRICS ever replace the U.S. dollar? While BRICS nations discuss reducing dollar reliance, replacing it is unlikely anytime soon due to their reliance on U.S. markets, lack of a unified financial system, and China s reluctance to globalize the yuan.It's unlikely that a BRICS currency will completely replace the dollar in the near future.

Gradual Shift in Global Monetary Balances

A more likely scenario is a gradual shift in global monetary balances, with the RMB and other currencies playing a larger role in international trade and investment.This could lead to a more multipolar financial system over time.

Conclusion: The Future of the Dollar in a Multipolar World

The question of whether BRICS will replace the dollar is complex and multifaceted. Brazil's President called on Wednesday for the BRICS nations to create a common currency for trade and investment between each other, as a means of reducing their vulnerability to dollarWhile the BRICS nations are actively seeking alternatives to the dollar, significant challenges remain. U.S. President-elect Donald Trump on Saturday demanded that BRICS member countries commit to not creating a new currency or supporting another currency that would replace the United States dollarA complete replacement of the dollar is unlikely in the short term, but a gradual shift towards a more multipolar financial system is a distinct possibility. The new year saw four of the largest economies in the Middle East and North Africa join the BRICS economic union. The accession by Egypt, Iran, Saudi Arabia, and the United Arab Emirates represents a strategic step away from the United States and Europe.The motivations are clear: reduce vulnerability to sanctions, insulate against dollar devaluation, and challenge US dominance. Mr Putin is hoping to capitalise on this dollar dissatisfaction at the BRICS summit. For him, creating a new scheme is an urgent practical priority as well as a geopolitical strategy. Russia sThe obstacles, however, are numerous, including the lack of a unified financial system, economic disparities, and the need to establish international trust. BRICS is looking to create a new payment system for cross-border transactions without incorporating the US dollar in the mechanism. The payment system will embody local currencies for trade settlements and end reliance on the US dollar. The new payment mechanism is termed BRICS Bridge and isUltimately, the future of the dollar will depend on a complex interplay of economic, political, and technological factors. In December 2025, then President-elect Trump had posted on social media that We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar, or they will face 100 per cent tariffs and should expect to say goodbye to selling into the wonderful US economy .As the BRICS economies continue to grow and the US-China relationship remains strained, the pressure for a viable alternative to the dollar will only intensify.Washington should take note of how frustrations with the dollar are helping enable the rise of the RMB in emerging markets and motivating strategic partners like India to push for greater use of non-dollar currencies. While talk of a possible currency has focused attention on options to replace the dollar, South Africa s BRICS ambassador, Anil Sooklal, said the goal is less about replacing the dollar thanThe world is watching closely to see if the BRICS can overcome these challenges and create a viable alternative to the dollar's long-held dominance. This looks a bit like a chicken-or-egg problem: BRICS Bridge is unlikely to launch before the five major BRICS economies have a common digital currency, but launching such a currency is useless ifThe concept of BRICS replace dollar is, therefore, far from just a theoretical discussion.