The Platform

Photo illustration by John Lyman

Russian President Vladimir Putin mentioned the development of a new global reserve currency in a recent speech to the BRICS Business Forum. This global reserve currency is expected to replace the special drawing right of the International Monetary Fund and includes the national currencies of the BRICS member states.

Putin’s announcement has highlighted the significance of acknowledging the diverse motivations of the BRICS nations to not only facilitate intra-BRICS trade in local currencies but also firewall their global financial interests at a time when Russia is facing unprecedented global sanctions in the wake of Putin’s invasion of Ukraine.


China is Brazil’s biggest trading partner and using the local currency in cross-border transactions benefits both nations. Even though the United States only receives 17% of Brazil’s total exports, the country’s reliance on the dollar is extremely apparent given that about 90% of its export invoices are in dollars.

Brazilian policymakers may support the creation of a BRICS reserve currency as a result of this imbalance. The idea of using BRICS as a de-dollarization alliance was supported by former President Lula da Silva, who expressed his discomfort at the dominance of the dollar in Brazilian trade. Additionally, he claimed that BRICS was developed as an instrument of attack rather than defence.

However, because of its catastrophic economic crisis in 2014 and the emergence of the Bolsonaro government, Brazil’s position on de-dollarization has drastically weakened. Under Bolsonaro, the Brazilian government has shifted its allegiance to the West and has been inconsistent in its support for the BRICS reserve currency.

Brazil will probably not be at the forefront of the BRICS de-dollarization ambitions due to its tight economic ties to China and reliance on the U.S. dollar. It is aware that these moves will benefit it since they will make trading with China and other major economies like Russia and India easier.


Russia has long tried to use BRICS to further the idea of de-dollarization due to Putin’s geopolitical objectives. The idea of an alternative financial system free from Western dominance has been further bolstered by the near-elimination of Russia from the Western-led, dollar-dominated financial system following its unprovoked invasion of Ukraine.

In late 2018, the Kremlin-backed a de-dollarization strategy to lessen Russia’s reliance on the U.S. dollar by restricting international settlements and conducting business using alternative currencies. Putin has repeatedly emphasised the need to further de-dollarize and defend Russia’s economic independence.

Former Russian Deputy Foreign Minister Sergei Ryabkov also emphasised the country’s concerns over the use of the dollar for banking and international settlements, highlighting the necessity of reducing dependence on it. He also stated that the BRICS members were prepared to work together to advance changes in international financial policy and end the overpowering dominance of a select few reserve currencies.


In the Indo-Pacific, the U.S. views India as a strategic partner in contrast to China and Russia. The Indian government does not publicly endorse the mobilisation of BRICS to challenge the dollar’s hegemony because it views Russia and China’s efforts to decrease dollar usage as more ideological than practical. The most recent military confrontations between China and India also make it impossible for India to support China’s efforts to usurp the dollar.

This, however, does not entirely capture India’s position on U.S. dollar hegemony. India has previously looked into ways to lessen its reliance on the currency. For instance, India’s Ministry of Commerce and Industry assembled a task force in 2012 to examine the possibility of utilising the Indian rupee in India’s bilateral commerce, specifically endorsing the idea of using the rupee to deal with oil-exporting nations. A multi-agency task force comprised of members from the government of India’s economic governing bodies was also established to prepare a list of nations with which India may engage in rupee trading.

India has been pushed to encourage increased use of the rupee for foreign transactions by currency volatility and geopolitical developments like U.S. oil sanctions against Russia and Iran and China’s ambitions to internationalise the yuan. India is encouraged to de-dollarize by the growth in global currency volatility because it is one of the most heavily dollarized nations when it comes to trading invoicing. This will be difficult, though, because only 5% of India’s imports come from the U.S. and 86% of its imports are invoiced in U.S. dollars. Like this, despite only 15% of India’s exports going to the U.S., 86% of its exports were invoiced in U.S. dollars.

India won’t likely participate explicitly in any BRICS effort to lessen the impact of the U.S. dollar, but it may help reduce dollar dependence by supporting programmes that encourage the use of local currencies in trade and finance.


China has consistently criticised the dollar hegemony, but its authorities have not developed a clear strategy to undermine its standing as the world’s reserve currency. The deterioration in U.S.-China ties has brought to light the power of the U.S. currency and its capacity to obstruct Chinese commerce and technological advancement. Such obstacles have pushed China to leave the U.S.-dominated global order and maybe establish a sphere of influence with the BRICS countries.

China is the world’s largest trading partner and is ideally situated to support the de-dollarization of the region and the world. In terms of financing for development, China plays a significant role in several Asian and African nations. China has also used offshore markets and the Belt and Road Initiative to internationalise the renminbi.

Zhou Xiaochuan, former head of China’s central bank, asserted that the spillover effect showed the systemic dangers and fundamental flaws of the global monetary system in the wake of the global financial crisis of 2008. He pushed for the creation of a world reserve currency that is not tied to any specific nations. Former Chinese President Hu Jintao called the dollar-dominated global monetary system a “product of the past.”

South Africa

Although South Africa has adopted Russia and China’s de-dollarization strategies, it has not independently advocated or developed any of its own initiatives. Since U.S. sanctions were dropped in 1991 following the end of apartheid, U.S. relations with South Africa have significantly improved. South Africa may not have a detailed de-dollarization strategy, but it is aware of currency fluctuations, particularly those involving the U.S. dollar.

South African Trade and Industry Minister Rob Davies addressed worries about exchange volatility and reliance on unstable foreign currencies during the 2011 BRICS meeting and emphasised the advantages of trading directly in the South African rand. He also reaffirmed the necessity of creating protocols to settle trade in local currencies at the 2013 BRICS meeting. He showed how the global economy directly affects currency volatility in poor nations, making them price takers whose currency risk can be triggered by macroeconomic circumstances outside of their control.

Beyond the BRICS states, the lack of economic sovereignty among emerging countries is a source of concern. South Africa was encouraged to support the BRICS’ intentions to encourage the use of local currencies in trade because of the transactional and financial risk associated with the U.S. dollar’s predominance. To diversify currency risk, South Africa has agreed to the wider use of the Chinese yuan and added it to its foreign exchange reserves.


The BRICS countries have shown greater collaboration and want to overhaul the dollar-based financial system. To protect their interests resulting from their geopolitical rivalry with the U.S. and in light of the possibility of future sanctions against them, Russia and China are driving the de-dollarization movement within the BRICS. India, Brazil, and South Africa have backed BRICS’ remarks that the global financial system should be changed and that there should be greater chances to encourage the use of national currencies in international trade. To reduce their reliance on the dollar and increase their financial independence, all of the BRICS nations have taken action.

The main goal of creating a basket currency for the BRICS countries that is like the special drawing right is to challenge U.S. dollar hegemony and expand their zone of influence and currency inside that region. The desire of all BRICS nations to transfer foreign reserves to expand this new area of influence is still unknown.

All of the BRICS countries have a common interest in de-dollarization as a method to diversify their economies and lower the risk of external currency shocks brought on by the U.S. dollar. Although the BRICS member states seek to protect their financial interests globally by creating a reserve currency, their excessive reliance on the U.S. dollar presents difficulties that could delay the realisation of this goal.

Pravesh Agarwal is a student of law at National law University, Lucknow, India with an interest in international affairs and human rights.