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When BRICS leaders met over the weekend, they discussed the economic strength of the Global South and the need to expand trade in local currencies, hinting at moves to reduce dependence on the dollar.
Experts say the European Union aims to reduce its dependence on the dollar due to geopolitical tensions, economic sanctions and US tariff policy. However, they raised questions about the ability of BRICS to break away from the dollar.
For years, the term “de-dollarization” has been thrown around from time to time, especially when confidence in the United States has been shaken.
The idea is simple. Today, countries primarily trade in the US dollar, which underpins much of the world’s financial system. For example, the two most traded commodities in the world, oil and gold, are denominated in dollars.
According to data from the Bank for International Settlements, as of April, the US dollar accounted for 89% of the foreign exchange market (up 1 percentage point from the previous year), while the euro and yen accounted for 29% and 17%, respectively.
South African President Cyril Ramaphosa said in a speech at the BRICS Summit that BRICS should “expand the use of local currencies, strengthen cross-border payment systems and deepen financial interconnectivity.”
Energy-rich countries such as Iran and Russia, BRICS members whose transactions in dollars are blocked by US sanctions, have also called on EU countries to develop clearing, settlement and deposit infrastructure within BRICS.
Iranian President Masoud Pezeshkian said the current financial system is “vulnerable to political shocks because it is concentrated in a limited number of currencies,” suggesting the need for diversification away from the dollar.
But experts say a lack of financial and macroeconomic integration, wide trade imbalances and deep mistrust among key members such as China and India are the biggest hurdles the BRICS must overcome before it can break away from the dollar’s hegemony.
Jayant Krishna, a senior fellow at the Center for Strategic and International Studies, told CNBC that BRICS lacks the unified institutional, financial and macroeconomic infrastructure needed to replace the dollar’s “inherent liquidity and confidence” globally.
baby steps
De-dollarization is usually most commonly mentioned among the BRICS countries. US President Donald Trump has in the past threatened to impose tariffs if the bloc moves away from the dollar.
“We ask these countries to commit not to create another BRICS currency or support another currency to replace the mighty US dollar, or face 100% tariffs and bid farewell to our great American economy,” Trump wrote.
Together, the 10 BRICS members will account for 27% of global output, 24% of merchandise exports and 22% of foreign direct investment inflows in 2024, according to the United Nations Trade and Development Report in March.
“This brings new opportunities, avenues of cooperation and enormous potential,” the report said, while stressing that intra-BRICS trade currently accounts for only about 5% of global trade by 2024.
Member countries have talked about expanding trade in their own currencies, but there have been few concrete steps in that direction. The BRICS 2026 Declaration did not mention firmer details regarding trade settlements and investments using the common currency or the BRICS local currency. Instead, the BRICS Payments Task Force was asked to work on promoting “practical solutions for cross-border payments.”
“Russia and China now settle nearly 90% of their trade in rubles and renminbi,” but that change is being accelerated by U.S. sanctions starting in 2022 rather than a coordinated BRICS policy, Reema Bhattacharya, head of Asia research at Verisk Maplecroft, told CNBC.
He explained that most BRICS currencies lack deep liquid markets outside of their home economies, which prevents exporters from accepting them, making dollar claims the path of least resistance for global goods.
Experts said conflicting interests among BRICS countries also made de-dollarization difficult.
Competition between China and India
“The conflict between India and China is arguably the single biggest brake on the bloc’s overall cohesion,” Bhattacharya said.
Both Beijing and New Delhi want greater strategic autonomy from Washington, but remain direct competitors in manufacturing, technology, investment and regional influence.
This tension, in addition to widening the trade imbalance between the two BRICS powers, makes it difficult to maintain the trust needed for deeper financial integration.
China is one of India’s largest business partners, with total trade totaling $151.1 billion in the year ending March 2026, a record high. However, New Delhi’s deficit with China also increased from $99.21 billion to a record $112.16 billion.
Meanwhile, trade in goods and services between India and the United States was approximately $239 billion in 2025, with a goods trade surplus of $58.4 billion and a services trade surplus of $4.7 billion. Therefore, moving away from the dollar will not work to India’s advantage, as it has a large trade deficit with China and other countries.
“BRICS countries have very different priorities,” Krishna Bhimavarapu, APAC economist at State Street Investment Management, told CNBC.
Russia and Iran want to reduce their exposure to the dollar due to sanctions risks. China wants to expand the international use of the renminbi, but maintains capital controls. Meanwhile, India said it supports greater use of the rupee.
“Ultimately, there is currently no BRICS-led alternative that can match the dollar’s liquidity, market depth, credibility and global acceptance,” he added.
