De-dollarisation in BRICS: Strategic Ambition or Practical Gradualism?

Introduction

The debate on de-dollarisation has become one of the most prominent themes in contemporary discussions on BRICS economic cooperation. As BRICS has expanded and deepened its role in global governance debates, interest has grown in whether the grouping can reduce dependence on the United States dollar in trade, development finance, and cross-border payments. Yet much of the public discussion remains imprecise. De-dollarisation is often presented as the imminent replacement of the dollar as the world’s principal reserve currency. In reality, the official BRICS position suggests something more measured: a gradual effort to increase the use of local currencies in trade and financial settlements, improve payment interoperability, and expand financing tools that reduce exposure to exchange-rate risk.

This distinction is important. The official BRICS documents do not present de-dollarisation as a sudden rupture with the international monetary system. Rather, they present it as part of a wider agenda of financial resilience, institutional reform, and more inclusive global economic governance. Under India’s 2026 chairship, BRICS is explicitly framed around “Resilience, Innovation, Cooperation and Sustainability,” with economic resilience, development finance, and trade facilitation listed among its core pillars.

This article argues that de-dollarisation in BRICS is best understood not as an immediate attempt to displace the dollar globally, but as a strategy of practical gradualism. BRICS is seeking to widen the use of local currencies, strengthen financial and payment infrastructure, and expand institutional tools such as the New Development Bank (NDB). In this sense, BRICS is not yet building a post-dollar order; it is building a less dollar-dependent operating space for its members and partners.

 

What de-dollarisation actually means

A useful starting point is to clarify what de-dollarisation means in practice. The term refers to several related but distinct processes. First, it can mean trade settlement in local currencies, where imports and exports are invoiced and paid for without using the dollar as the intermediary currency. Second, it can mean local-currency financing, where loans, bonds, and infrastructure financing are denominated in domestic currencies rather than in dollars. Third, it can refer to institutional and infrastructural changes, such as payment systems, clearing arrangements, and settlement platforms that reduce dependence on traditional dollar-based channels. A fourth and much more ambitious meaning is reserve de-dollarisation, where central banks materially reduce their reliance on the dollar as a reserve asset.

These forms of de-dollarisation are not equally attainable. BRICS has made its clearest progress in the first three areas. Official statements place strong emphasis on the “enhanced use of local currencies in trade and financial settlements,” as well as on the feasibility of BRICS payment instruments, platforms, and clearing arrangements. By contrast, official BRICS documents do not claim that the bloc is on the verge of replacing the dollar as the dominant global reserve currency. That distinction matters analytically because the operational expansion of local-currency use is far more achievable than a transformation of the global reserve system.

 

Why BRICS seeks to reduce dollar dependence

The BRICS interest in de-dollarisation is driven by practical concerns rather than symbolism alone. One major concern is exchange-rate risk. When projects, trade, or sovereign borrowing are financed in dollars while revenue is earned in domestic currency, governments and firms are exposed to depreciation shocks and higher servicing costs. The New Development Bank’s strategy directly addresses this issue by arguing that local-currency lending helps clients mitigate foreign-exchange risk and reduce dependence on costly swap markets. Its annual reporting further notes that access to local-currency credit and the use of currency swaps can address cash-flow mismatches and lower the costs associated with hedging.

A second motivation is financial resilience and policy autonomy. BRICS countries have increasingly argued for a more inclusive and representative international financial architecture. In this context, the push for local-currency trade and financing is linked to a wider effort to reduce vulnerabilities associated with excessive dependence on external payment systems, external liquidity conditions, and established financial intermediaries. The 2025 BRICS leaders’ and ministerial statements situate these efforts within a broader project of strengthening Global South cooperation and reforming global governance structures.

A third driver is the high cost and inefficiency of cross-border payments. The 2025 BRICS Finance Ministers and Central Bank Governors’ Joint Statement welcomed the “Technical Report: BRICS Cross-border Payments System” and noted that it should support efforts to facilitate “fast, low-cost, more accessible, efficient, transparent, and safe cross-border payments” among BRICS countries and other nations. This language shows that de-dollarisation is not only about currency choice; it is also about the infrastructure through which trade and finance move. 

 

Trade settlement versus reserve currency replacement

A major analytical error in many discussions of BRICS de-dollarisation is to conflate local-currency trade settlement with reserve currency replacement. These are fundamentally different projects. Local-currency trade settlement can expand gradually through bilateral or plurilateral arrangements, especially where trade volumes are large and payment channels can be developed efficiently. That is why BRICS documents focus on local currencies, payment instruments, and technical feasibility.

Replacing the dollar as the world’s leading reserve currency is far more difficult. Reserve status depends on deep and liquid capital markets, broad international confidence, legal predictability, a strong investor base, and powerful network effects. None of the official BRICS statements suggest that such a transition is imminent. Instead, they point to a more incremental vision: increasing the share of transactions that can be settled outside the dollar where doing so is commercially and institutionally viable.

This is why the idea of practical gradualism is so useful. BRICS does not need to replace the dollar globally in order to alter the financial landscape for its own members. If more trade can be settled in domestic currencies, if more infrastructure projects can be financed without currency mismatch, and if payment systems become more interoperable, then a meaningful degree of de-dollarisation will already have occurred.

 

The role of the New Development Bank

The New Development Bank is the clearest institutional mechanism through which BRICS de-dollarisation is taking material form. The NDB’s legal framework allows it to provide financing in local currencies where appropriate, and its 2022–2026 General Strategy explicitly states that local-currency financing is a key component of its value proposition. The strategy further provides that the Bank aims for 30% of its financing commitments over the strategy cycle to be denominated in the national currencies of member countries, subject to market conditions, regulations, and pricing. The Bank’s annual report reiterates the importance of this goal and explains that local-currency lending and swaps help reduce exposure to exchange-rate and interest-rate risk.

This matters for at least three reasons. First, it aligns financing with domestic revenue streams, reducing currency mismatch. Second, it supports the development of domestic capital markets by encouraging funding in local currencies. Third, it gives BRICS a practical and credible financial institution through which gradual diversification can occur. Official BRICS statements have repeatedly supported the Bank’s role, with the April 2025 Foreign Ministers’ statement emphasizing the importance of “continuously expanding local currency financing and strengthening innovation in investment and financing tools”.

At the same time, the NDB also illustrates the limits of de-dollarisation. The Bank continues to operate within a global financial system in which dollar funding remains important. Its current project page states that it has approved USD 42.9 billion in financing across 139 projects, showing substantial scale, yet its funding model remains diversified rather than exclusively local-currency based. The lesson is not that the de-dollarisation project has failed, but that it is unfolding within existing market realities rather than outside them. 

 

Payment systems and financial infrastructure

If local-currency trade is to expand, payment systems must become more efficient and interoperable. This is why the BRICS discussion increasingly focuses on financial plumbing rather than slogans. The 2025 Leaders’ Declaration welcomed progress by the BRICS Payment Task Force and supported continued discussion of the BRICS Cross-Border Payments Initiative, stressing the goal of faster, cheaper, and safer payments. The 2025 Finance Ministers and Central Bank Governors repeated this emphasis and also referred to continued technical dialogue on settlement and depositary infrastructure. 

This suggests that the real test of BRICS de-dollarisation is not whether a dramatic alternative currency suddenly emerges, but whether the bloc can build credible systems for messaging, settlement, clearing, and liquidity support. If importers and exporters face lower costs and fewer delays when using local currencies, then de-dollarisation becomes commercially meaningful. If they do not, then the dollar will continue to dominate by default, regardless of political declarations.

 

The barriers to BRICS de-dollarisation

Despite its momentum, BRICS de-dollarisation faces serious structural constraints. The first is convertibility. Not all BRICS currencies are equally easy to access, trade, hedge, or repatriate. The second is liquidity and market depth. For a currency to be used widely in trade and finance, it must be supported by liquid markets, reliable instruments, and broad investor confidence. The NDB’s own strategy acknowledges that the country-by-country use of national currencies will vary based on market conditions, regulations, and pricing. 

A third barrier is trust and macroeconomic stability. Private firms and financial institutions will use local currencies only where volatility, regulatory uncertainty, and operational friction are manageable. A fourth barrier is institutional fragmentation. BRICS is not a monetary union; it is a coalition of states with diverse exchange-rate regimes, financial systems, and geopolitical interests. This diversity is one of BRICS’s strengths politically, but it complicates monetary coordination technically. Official BRICS documents therefore use careful language around feasibility, discussion, and technical cooperation rather than immediate implementation. 

 

What success would realistically look like

For BRICS, success should not be defined as ending the dollar’s dominance in the foreseeable future. That benchmark is too absolute and not supported by official documents. A more realistic benchmark would include a rising share of intra-BRICS and BRICS-partner trade settled in local currencies; wider use of local-currency development finance; stronger cross-border payment interoperability; and lower transaction and hedging costs for firms and governments. 

Under this standard, de-dollarisation is not a binary event but a gradual process of diversification. Its purpose is not to abolish the dollar, but to reduce overdependence on it where this dependence creates vulnerability, inefficiency, or policy constraint. That is a more realistic and more measurable conception of success.

 

Conclusion

De-dollarisation in BRICS should be understood as a strategy of practical gradualism rather than monetary rupture. Official BRICS statements consistently support increased use of local currencies, improved payment mechanisms, and the expansion of innovative financing tools. The New Development Bank has become the most concrete institutional expression of this agenda by explicitly promoting local-currency financing and aiming to scale such lending over time. 

The limitations remain substantial. The dollar continues to dominate because of its market depth, liquidity, and network effects. BRICS currencies differ sharply in convertibility, stability, and financial infrastructure. Yet these constraints do not render the BRICS project meaningless. They simply clarify its true nature. BRICS is not currently replacing the dollar as the core of the international monetary system. It is, however, steadily constructing a wider space for local-currency trade, more flexible development finance, and more autonomous cross-border settlement mechanisms. That may not amount to a post-dollar order, but it does amount to a significant rebalancing of financial options within the Global South.