BRICS TO REPLACE DOLLAR

Last updated: June 24, 2025, 18:31 | Written by: Anthony Di Iorio

For decades, the US dollar has reigned supreme as the world's reserve currency, facilitating international trade and investment.

Important: 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 sanctions

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.This isn't just a theoretical debate; it's a potential shift in the global power dynamic with significant implications for economies worldwide.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?In 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.

Research shows: 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 weeks

The topic of BRICS replace dollar is certainly a hot one.

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

methodology for alternatives? represents key aspects of this topic.

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

"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."

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.Countries 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.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.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.Several 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.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.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.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.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.Some BRICS nations may be hesitant to cede sovereignty over their monetary policies to a common BRICS institution.Furthermore, 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.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.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.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.Replacing the dollar is a long-term process that will require significant effort and cooperation from the BRICS nations.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.While the BRICS nations are actively seeking alternatives to the dollar, significant challenges remain.A 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 motivations are clear: reduce vulnerability to sanctions, insulate against dollar devaluation, and challenge US dominance.The obstacles, however, are numerous, including the lack of a unified financial system, economic disparities, and the need to establish international trust.Ultimately, the future of the dollar will depend on a complex interplay of economic, political, and technological factors.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.The 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.The concept of BRICS replace dollar is, therefore, far from just a theoretical discussion.