“The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is over. We demand these countries’ obligation not to create a new currency and not support any other currency that could replace the strong US dollar. Otherwise, they will face 100% tariffs and say goodbye to sales in the large US economy,” wrote the newly elected and still unsworn Donald Trump, adding that any country trying to replace the dollar in international trade will have to “shake America’s hand of reconciliation.”
What is BRICS, and what is it about?
The founding countries of BRICS—Brazil, Russia, India, China, and South Africa—are among the fastest-growing economies of the 21st century. In recent years, their leaders have openly spoken about their desire to reduce dependence on the US dollar, the world’s reserve currency, which accounts for approximately 80% of global trade.
Experts generally agree that the existing financial system provides significant advantages to the United States, including low interest rates for borrowing, the ability to finance budget deficits, and maintaining the stability of its currency exchange rate. Additionally, the dollar is the primary currency to price key commodities such as oil and gold. It is no coincidence that the US dollar has become a “haven” for investors during economic instability.
However, Washington reaps not only economic but also geopolitical benefits. The dollarization of the global economy turns the United States into a powerful tool of pressure, allowing it to impose sanctions and restrict access to capital and trade. Therefore, the BRICS group accuses Washington of “using the dollar as a weapon” and seeks to force other countries to act within the limits defined by US interests.
The discussion about a new unified currency was revitalized after the United States and the European Union imposed sanctions on Russia in 2022 due to its full-scale military invasion of Ukraine. Russia’s partners clearly stated they feared becoming the following sanctions target if their relations with the West deteriorated.
Currently, BRICS consists of 10 member states. Saudi Arabia, the United Arab Emirates, Egypt, Iran, and Ethiopia have joined Russia, Brazil, India, China, and South Africa. Algeria, Bangladesh, Bahrain, Belarus, Bolivia, Venezuela, Vietnam, Cuba, Honduras, Indonesia, Kazakhstan, Kuwait, Morocco, Nigeria, the State of Palestine, Senegal, and Thailand have also presented official requests to join BRICS.
How did the idea and plan come about?
The idea of creating a BRICS currency first emerged after the 2008-2009 financial crisis when the US real estate market collapsed, and regulatory failures nearly broke the entire global banking system. Last year, at the BRICS summit held in South Africa, representatives of the participating countries agreed to explore the possibility of creating a common currency to reduce risks associated with the dollar. However, they also noted that implementing this plan would take years.
How realistic is the idea of a common currency?
Creating a new unified currency for BRICS will be a major challenge with many difficulties due to the significant differences in the political and economic systems of the member countries.
For example, China’s authoritarian governance accounts for approximately 70% of BRICS’ total GDP ($17.8 trillion). China has a dollar surplus and large reserves to maintain its competitiveness as a major exporter. Conversely, India has a trade deficit and a total economy of $3.7 trillion. China’s dominance creates a massive imbalance in the association, complicating India’s participation in a joint project. Differences among other BRICS members also hinder the idea of creating a common currency.
Thus, everyone agrees that creating a fully-fledged new currency, following the dollar or euro model is extraordinarily long and challenging. For example, the European currency took more than 40 years from the first discussions in 1959 to the introduction of euro banknotes in Europeans’ wallets in 2002.
BRICS does not want to weaken the dollar
Let’s return to Trump’s accusation, which has already been answered.
BRICS countries are not interested in weakening the US dollar. According to Reuters, India’s Minister of External Affairs, Subrahmanyam Jaishankar, stated that they do not want to do this.
Brazil called Trump’s statements provocative. The South American country’s Ministry of Foreign Affairs noted that these threats “make no sense” and hoped that the future White House administration would consider the current state of the global economy and not adopt similar measures after taking office.
Meanwhile, the Governor of India’s Central Bank, Shaktikanta Das, noted that a decision on creating a unified currency to reduce the use of the dollar has not yet been made. “The BRICS currency was an idea proposed by one of the bloc’s members. It was considered, but no decision was made. We must also consider the geographical heterogeneity of the countries,” he said.
Geopolitics or economic revitalization: What do the Russians say
As Russia is one of the key players in BRICS and a major opponent of the US, let’s see what they say in Russia and how Russian experts assess its prospects.
“It is possible to replace the dollar, but it will not happen immediately, only in a long-term perspective,” says Dr. Yevgeny Smirnov, Professor and Head of the Department of World Economics and International Economic Relations at the State University.
“Despite its reduced share in international trade balance settlements, the dollar remains a key international lending capital in markets where countries hold reserves and in the global currency market, where its share exceeds 80%. Ending this dominance will take time,” the expert believes.
“The global financial system based on toxic currencies is no longer in many countries’ interests. BRICS is actively moving towards settlements in national currencies, reducing their dependence on the dollar and the euro and improving the structure and dynamics of international trade. This will positively affect the countries’ economic development,” says Artur Leer, Vice-President of the Exporters and Importers Association.
His assessment is that introducing a unified currency in BRICS would further strengthen the trend of abandoning toxic currencies.
“Switching to national currency settlements or creating a unified currency within BRICS is not only a desirable goal but also an inevitable step to strengthen economic ties between countries and reduce their dependence on toxic currencies,” Leer concludes.
The dollar’s collapse is primarily a geopolitical discussion topic, and the feasibility of abandoning the American currency is still not assessed,” says Stanislav Saveliev, head of the Department of Digital Payments and Payment Methods.
“Theoretically, we can imagine a scenario where the dollar’s position weakens, but this will require significant resources and time because it remains a strong global reserve currency due to high demand,” the expert stated.
“At the same time, ‘collapse’ always has a destructive effect on markets with free competition, and this, in turn, may negatively affect the financial infrastructure costs for market participants,” Saveliev believes.
Putin is still cautious
“BRICS countries are not yet ready to create a unified currency due to differences in the structure and quality of their economies. We might return to this issue in the future, but for now, the focus is on using national currencies, creating new financial instruments, and a SWIFT analog,” says Russia’s President Vladimir Putin.
“As for a unified currency, we are not considering this issue at this stage,” he said at a meeting with journalists from BRICS countries.
According to him, BRICS countries “must be very careful” and “act slowly and sequentially.”
Putin’s Theater for the West
Let’s see what other experts have to say and how they evaluate the situation.
William Pomeranz (Kennan Institute in Washington): In Putin’s portrayal, BRICS serves as an instrument for creating a multipolar world that aims to establish an alternative financial system. However, nothing substantial has emerged from this initiative. The dollar remains and will continue to be the dominant currency in the near future. A new currency does not create a new world order, nor does it open new opportunities for development. It appears that no one wants to follow Russia, which is heading towards isolation.
Christian Mölling (Political Scientist, Bertelsmann Foundation): Mölling sees no special significance in BRICS. He primarily views it as Putin’s theater, directed at the Western audience during the Kazan Summit, to demonstrate that he is not isolated. “The participating countries,” the expert explained, “have very different individual interests: some want to counterbalance the West, while others are searching for their place and course between the West and the East. Among them are countries that are in opposition to each other.”
A little history
How the world was dollarized
Over many decades, the US dollar has remained the dominant reserve and settlement currency in the international market. This began in the second half of the 20th century. After World War II, the world needed stability in many business areas, especially the economy. European countries and the USSR, which held key positions at that time, were in a severely weakened state after the costly and destructive war. Countries needed to restore their economies, reconstruct cities, build infrastructure, and return to a peaceful existence. Many European countries found themselves in deep economic crises. At that time, the state that had practically not been affected by the events of World War II was the United States. Because Washington had relatively quickly survived the global conflict, it offered a financial aid program called the “Marshall Plan” (for the post-war recovery of European countries). Through this plan, the dollar entered Europe in significant streams, which, one way or another, replaced the position of national currencies. Thus, European countries, especially the United Kingdom with the pound sterling, previously the world’s reserve currency, and the USSR, were in crisis and could not provide global financial stability, and the US dollar appeared as the most promising currency.
The official beginning of the dollar as an international reserve currency was in 1944, after the signing of the Bretton Woods Agreement, when the dollar became entirely the world’s reserve currency. It was widely accepted in central banks around the world and became a universal pricing mechanism for many commodities. The dollar was originally linked to gold, which meant it could easily be exchanged for gold. Many countries began creating reserves in American currency—as the most reliable and stable in the world.
