Last Updated on November 3, 2025 by Chicago Policy Review Staff
For nearly a century, the U.S. dollar has dominated global trade and finance, accounting for 59% of global foreign exchange reserves as of 2024 (IMF, 2024). In response to this enduring dominance, BRICS — an alliance of five major emerging economies: Brazil, Russia, India, China, and South Africa — is working to reduce its reliance on the dollar and promote a more multipolar financial system that enhances economic autonomy. While other currencies like the euro and yuan have expanded their roles, neither has come close to displacing the dollar’s supremacy.
This effort is commonly framed as de-dollarization: a significant reduction in the use of the U.S. dollar in global trade and financial transactions, which in turn lowers demand for the dollar among nations, institutions, and corporations (J.P. Morgan, 2024). It challenges the dominance of dollar-denominated capital markets, where most global borrowing and lending still occurs in dollars. Contrary to the popular belief that BRICS seeks to overthrow the dollar, Saaida (2024) argues that the bloc’s strategy is more pragmatic — aimed at enhancing financial independence and reducing vulnerability to U.S. monetary policy and sanctions. Western economic policy has accelerated BRICS’ push for financial alternatives. These economic initiatives from Western countries include Russia’s removal from SWIFT after the start of the Russia-Ukraine war, trade tensions between China and the U.S., and the influence of Federal Reserve policies on global markets. These geopolitical and financial motivations are now shaping concrete policy decisions around how BRICS members conduct cross-border transactions.
One of BRICS’ most tangible steps toward reducing dollar dependence has been shifting trade settlements to local currencies. China and Russia now conduct most of their bilateral trade in yuan and rubles, bypassing the dollar entirely. Brazil and China signed a yuan-real trade settlement agreement in 2023, and India has begun purchasing Russian oil in rupees. The addition of Saudi Arabia to BRICS in 2023 could further drive this shift, particularly in energy markets, where moving away from the petrodollar system could reshape global trade (Mohammed, 2024).
Despite these efforts, the dollar remains the world’s most liquid and trusted currency, making it difficult to replace. Barclays (2005) notes that even amid economic crises and geopolitical instability, the dollar has maintained unrivaled liquidity and a dominant market share. While BRICS currencies, particularly the Chinese renminbi, have expanded their role, the yuan still accounts for less than 5% of global reserves compared to the dollar’s 59%. This demonstrates that while BRICS has made progress, its alternatives have yet to fully compete with the global influence of the dollar.
Beyond trade, BRICS has established financial institutions to bypass Western-controlled systems. The New Development Bank (NDB), founded in 2014, has increased lending in local currencies, allowing member states to avoid the risks associated with dollar-denominated debt particularly in times of currency depreciation or global financial instability (Mielniczuk, 2013). Unlike the International Monetary Fund (IMF), which imposes policy conditions on its loans, the NDB supports financial sovereignty by adhering to each country’s regulatory frameworks.
China’s Cross-Border Interbank Payment System (CIPS) provides another alternative, facilitating yuan-based transactions independently of SWIFT. As of January 2025, CIPS has 1,467 indirect participants across 119 countries, linking 4,800 banks in 185 countries (CIPS, 2025). While CIPS is still smaller than SWIFT, its rapid expansion reflects growing confidence in yuan-based financial networks. Still, its success will ultimately depend not just on scale, but on global trust and widespread adoption beyond China’s immediate partners.
However, full de-dollarization faces internal and structural obstacles. Stephens (2011) argues that BRICS lacks the coherence necessary to function as a unified economic bloc. The political and economic diversity among BRICS nations — particularly the ideological and economic differences between democracies like India and Brazil and more centralized economies like China and Russia — creates barriers to deeper financial integration. China actively promotes yuan internationalization, yet India and Brazil remain cautious, given their strong economic ties to Western financial institutions. Additionally, BRICS lacks a unified reserve currency, making coordination across its members difficult. While CIPS and other financial networks offer an alternative to Western institutions, they have yet to match SWIFT’s global reach and integration.
Geopolitical resistance further complicates de-dollarization. U.S. President Donald Trump has explicitly opposed BRICS’ financial independence efforts, warning that any attempt to bypass the dollar would lead to a 100% tariff on BRICS exports to the U.S. (Reuters, 2025). This threat of economic retaliation and sanctions deters many nations from shifting too quickly away from the dollar, reinforcing its hold on global trade.
If history offers any lessons, it is that no currency remains dominant forever. The British pound, once the world’s reserve currency, lost its status to the U.S. dollar in the mid-20th century. Wessels (1989) explains that in 1948, the pound accounted for twice the global reserve share of the dollar, but by 1969, the dollar had overtaken it tenfold due to post-war economic shifts and the Bretton Woods system. By 1980, the pound had declined to just 2% of global reserves, illustrating that currency power follows economic dominance.
BRICS is not attempting to replace the dollar entirely but rather reduce its preeminent position in global finance. While the dollar’s liquidity and stability contribute to its current dominance, BRICS is already reshaping financial systems by expanding local currency trade and building alternative institutions.
For full de-dollarization to be successful, it requires strong coordination, improved currency stability, and greater adoption of BRICS-led financial mechanisms. If BRICS can prove that its alternatives are stable and efficient, the global financial order may evolve toward a more multipolar system in the coming decades.