Is the BRICS Currency Stronger Than the Dollar? Full Analysis
The BRICS countries (Brazil, Russia, India, China, South Africa and now expanded members) have discussed creating a shared currency or payment system to reduce reliance on the US dollar. But can such an initiative actually challenge the dollar’s global dominance?
Economic Scale and Size
The US dollar remains the dominant global currency. It is involved in nearly 90 percent of global foreign exchange transactions and held in roughly 59 percent of official foreign reserves. The US economy alone represents about 24 percent of world GDP (approximately 25 trillion USD).
By comparison, the BRICS bloc collectively has a GDP exceeding 32 trillion USD or approximately 31.6 percent of global output. While larger overall than the US, BRICS lacks unified economic institutions or deep integrated financial markets behind a single currency.
Structural Challenges
BRICS countries differ widely in political systems, monetary frameworks, economic structures and capital controls. China and Russia maintain tight capital controls, while India, Brazil and South Africa operate more open markets.
A shared currency would require a central monetary authority and coordinated fiscal and policy settings. Given asynchronous economic cycles across members, divergence in policy needs could destabilize monetary union efforts.
Network Effects and Trust
The US dollar benefits from global trust in US institutions, deep liquidity and established legal frameworks. Investors and central banks place confidence in dollar tenors, making it hard for any rival currency to match.
Experts say without institutional credibility and monetary stability similar to the Fed, markets are unlikely to adopt a BRICS currency on a mass scale.
Steps Toward Alternatives
Rather than launching a single currency, BRICS has moved toward systems like BRICS Pay — a decentralized payment messaging network aimed at enabling settlements in local currencies and bypassing SWIFT.
Individual member states, such as India, are expanding bilateral currency arrangements—for example using rupee, yuan, ruble for trade between members, reducing dollar exposure incrementally.
Prospects for a BRICS Currency
Proposals include a basket-backed currency (using member currencies or gold), and digital mechanisms for cross-border trade. Such instruments could act as a supplementary payment layer within BRICS.
However analysts caution that BRICS lacks sufficient denominated assets and financial depth to rival dollar dominance within a decade. Many see these plans as long‑term institutional evolution rather than immediate replacement.
Impact on the Dollar
Any future BRICS currency or infrastructure could gradually erode dollar exclusivity—but only slowly and largely within the bloc or allied markets.
The dollar’s role in international trade invoicing and reserves remains overwhelming. Even in BRICS trade, the dollar is used in the majority of transactions.
Brazil’s central bank director has explicitly ruled out dislodging dollar hegemony over the next decade, focusing instead on settlement tools rather than new currency issuance.
US political leaders have even threatened tariffs on countries that move to undermine dollar dominance, underscoring its entrenched position.