For decades, the US dollar has been at the centre of the global financial system. It is widely used in international trade, held by central banks as a reserve asset, and remains deeply connected to global banking and financial markets. But that dominance is now being questioned more openly. Countries are looking for ways to use their own currencies in trade and to build payment mechanisms that do not depend entirely on the existing dollar-based system. BRICS has become an important part of this discussion, with its members exploring greater use of local currencies and ways to make cross-border payments more efficient.
This brings us to a much bigger question: Can BRICS de-dollarisation actually challenge the dominance of the US dollar?
On the surface, the argument seems fairly simple. If BRICS countries start settling more of their trade in local currencies, connect their payment systems and reduce their dependence on dollar-based transactions, the role of the dollar could gradually become smaller. Recent BRICS discussions have, in fact, focused on local-currency transactions, payment-system interoperability and cross-border settlement mechanisms.
But there is an important distinction here – reducing dependence on the dollar is not the same thing as replacing it.
A country may use another currency for bilateral trade without treating that currency as a global reserve asset. Similarly, a payment system that allows countries to settle transactions without going through the dollar does not automatically create demand for a new global currency.
This is where the BRICS de-dollarisation debate becomes more complicated. The question is not simply whether BRICS can create a common currency. It is whether the bloc could build the financial markets, monetary institutions, liquidity, trust and international demand that a currency would need to compete with the dollar on a global scale.
There is another important point that often gets lost in the discussion: BRICS is not currently working on a common currency as an established project. Recent discussions have instead focused on expanding the use of local currencies and developing alternative payment and settlement mechanisms.
Thereby, before asking whether BRICS can replace the dollar, it is worth asking a more fundamental question:
What would it actually take to create a currency capable of challenging the dollar?
What Does BRICS De-Dollarisation Actually Mean?
The phrase “BRICS de-dollarisation” can sound more dramatic than what is actually being discussed. It is often interpreted as an attempt to remove the US dollar from international trade altogether. In practice, the idea is more nuanced.
BRICS countries have been discussing greater use of local currencies, alternative payment mechanisms and cross-border settlement systems to make trade and financial transactions less dependent on dollar-based infrastructure. The BRICS Cross-Border Payments Initiative, for example, focuses on making international payments faster, cheaper and more efficient, while encouraging settlements in local currencies.
That distinction matters because de-dollarisation does not necessarily mean abandoning the dollar. A country can reduce its use of the dollar in some transactions while continuing to use it extensively in other parts of its economy.
To understand what BRICS is actually trying to achieve – and whether those efforts could eventually affect the dollar’s global position – we first need to break down three things: what BRICS is, what de-dollarisation means, and what people actually mean when they talk about a “BRICS currency.”
BRICS
BRICS began as a grouping of major emerging economies, initially bringing together Brazil, Russia, India and China, with South Africa joining later. The grouping has since expanded, making it a broader platform for cooperation among emerging and developing economies.
Its agenda is not limited to currency or finance. BRICS also works across areas such as trade, investment, development, health, climate change and technology. Within the financial sphere, however, its members have increasingly discussed local-currency transactions and payment infrastructure.
So, when we talk about BRICS de-dollarisation, we are really talking about one part of a much wider process of economic and financial cooperation.
De-Dollarisation?
Simply put, de-dollarisation refers to reducing reliance on the US dollar in international economic and financial transactions.
This could happen in several ways. Countries might settle more bilateral trade in their own currencies, develop alternative payment channels, or create mechanisms that make it easier to exchange and settle transactions without first converting everything through the dollar.
BRICS discussions have increasingly focused on these practical mechanisms. The bloc has encouraged the use of local currencies in trade and financial settlements and has also been working on the broader question of cross-border payment infrastructure.
But there is an important catch: using local currencies more often does not automatically make those currencies global alternatives to the dollar.
Does De-Dollarisation Mean Abandoning the Dollar?
Not necessarily. This is where the discussion around BRICS de-dollarisation needs some clarification. Reducing the use of the dollar is very different from replacing it.
Suppose India and another BRICS country decide to settle part of their bilateral trade directly in their respective currencies. The transaction may no longer require the dollar as an intermediary. That could reduce dollar usage in that particular trade. But it would not mean that either country has stopped using the dollar for its other international transactions, investments, reserves or financial activities.
In other words, de-dollarisation can happen without a new global currency emerging.
This distinction is also visible in BRICS’ current financial agenda. The bloc has been discussing greater use of local currencies, cross-border payment mechanisms and settlement infrastructure. Its 2025 Rio Declaration called for continued work on the BRICS Cross-Border Payments Initiative and greater use of local currencies in financial transactions.
The idea of a single “BRICS currency”, however, is a different proposition altogether. In 2025, Brazil’s BRICS Sherpa Mauricio Lyrio stated that a common BRICS currency was not under discussion at the time. The focus was instead on reducing transaction costs through local currencies and payment platforms.
That distinction is important for this article because it allows us to separate what BRICS is doing today from what a future common currency would actually require.
Currency vs Local Currencies vs Payment Systems
These three concepts are often treated as if they mean the same thing.
Local-currency trade simply means countries use their existing national currencies for transactions. India, for instance, could settle a trade with another country partly in rupees rather than routing the transaction through the dollar.
Alternative payment systems deal with something different: the infrastructure through which money moves and transactions are settled. Such systems can reduce transaction costs or dependence on particular financial channels without creating a new currency at all. BRICS has been exploring precisely these kinds of arrangements, including cross-border payment mechanisms and financial-market infrastructure.
A common BRICS currency would be a much bigger undertaking.
It would mean creating a new monetary unit that could potentially be used across multiple economies. And that immediately raises a series of questions: Who would issue it? Which institution would control its monetary policy? How would its exchange rate be determined? Would member countries have to give up some monetary autonomy? Where would the currency be held and traded? And, perhaps most importantly, why would businesses, investors and central banks around the world choose to hold it?
That last question changes the entire debate.
Creating a currency is one challenge. Creating demand for that currency is another.
A currency can exist on paper without becoming important internationally. For a common BRICS currency to move beyond being a settlement tool and become a genuine competitor to the dollar, it would need more than political agreement among member states. It would need deep financial markets, sufficient liquidity, credible monetary institutions, mechanisms for managing exchange-rate and financial risks, and enough confidence for international investors and central banks to hold it.
What Would It Take to Create a BRICS Currency?
If BRICS were ever to move from reducing dollar dependence to creating a common currency, the challenge would begin long before the currency itself entered circulation. A currency is not simply a unit in which transactions are denominated. It requires an institutional framework that determines how it is issued, managed, valued and supported by the financial system.
This is particularly complicated for BRICS because its members have very different economic structures, monetary policies and financial systems. A common currency would therefore require some degree of coordination that goes beyond increasing trade in local currencies.
A Common Monetary Authority
The first question would be who controls the currency.
A common currency needs an institution responsible for monetary policy, including decisions related to money supply, interest rates and financial stability. The European Central Bank provides a useful example of how such an arrangement can work across multiple economies, although the BRICS context would be considerably different.
For a BRICS currency, member countries would have to decide whether monetary authority should be centralised in a new institution, shared among existing institutions, or linked to a predetermined framework.
That immediately creates a difficult issue: monetary sovereignty. Countries currently use their own central banks to respond to inflation, economic slowdowns and financial crises. A common currency would potentially limit the ability of individual governments to use exchange rates or monetary policy according to domestic conditions.
How Would the Currency Be Designed?
The next question is what the currency itself would represent.
One possibility could theoretically be a currency based on a basket of member currencies, rather than being directly tied to one national currency. Another model could involve a digital settlement unit used primarily for cross-border transactions rather than replacing national currencies in everyday domestic payments.
These are fundamentally different arrangements.
A shared currency used by individuals and businesses would require a much deeper level of monetary integration. A common settlement unit, by comparison, could potentially be used more narrowly for international trade and financial transactions.
Therefore, the term “BRICS currency” can refer to very different possible models, and assessing its feasibility requires first defining what kind of currency is actually being proposed.
Who Would Issue It?
Issuance would be another major institutional question.
A currency needs a mechanism through which its supply is created and regulated. If a new BRICS institution were responsible for issuing the currency, member countries would have to agree on its mandate, governance structure and relationship with their existing central banks.
There would also be questions about how much currency each economy would receive, what assets would support it, and how its value would be maintained during periods of economic or financial stress.
This becomes particularly relevant because the economies within BRICS do not have identical inflation rates, growth patterns or monetary conditions. A monetary framework that works for one member may not necessarily suit another.
Payment and Settlement Infrastructure
Even a well-designed currency would have limited usefulness without the infrastructure to move and settle it.
Banks, businesses and financial institutions would need mechanisms for holding the currency, making payments, clearing transactions and managing foreign-exchange risks. Cross-border payment systems would therefore become an essential part of any common-currency arrangement.
This is one reason the current BRICS agenda around payment interoperability and cross-border settlement is relevant to the larger currency debate. The 2025 Rio Declaration specifically called for continued work on the BRICS Cross-Border Payments Initiative and recognised progress by the BRICS Payment Task Force.
However, building payment infrastructure and building a globally demanded currency are still two different tasks.
Governance and Trust
Perhaps the most difficult issue would be governance.
A common currency would require members to agree on rules governing monetary policy, financial stability, currency issuance and crisis management. The larger and more economically diverse the group becomes, the more complicated these decisions could become.
There would also need to be confidence that the institution managing the currency would remain predictable and credible across changes in national governments and economic conditions.
This leads to a distinction that is central to the entire question of BRICS de-dollarisation:
Creating the infrastructure for a currency is not the same as creating demand for it.
A BRICS currency could theoretically be created through political and institutional agreements. But for it to become an important international currency, governments, companies, investors and central banks would have to find reasons to use and hold it.
And that brings us to the more difficult part of the debate: what makes people actually want to hold a currency?
That is where the difference between simply creating a currency and creating a global reserve currency becomes important. The dollar’s position, for example, is supported not by its existence alone but by the depth of US financial markets and its continued role in international reserves. The IMF’s COFER data show that the dollar still accounted for roughly 58% of global allocated foreign-exchange reserves in 2025, illustrating the scale of the existing network around it.
Creating a Currency Is Not the Same as Creating Demand
Suppose BRICS eventually succeeds in creating a common currency. Even then, one major question would remain unanswered: who would actually want to use and hold it?
A currency performs several functions, and international importance depends on more than its ability to facilitate transactions. At the most basic level, a currency serves as a medium of exchange – it allows buyers and sellers to conduct transactions. But an internationally important currency also needs to function as a store of value. Governments, financial institutions, investors and businesses must be willing to hold it because they expect its value and financial system to remain sufficiently stable.
This distinction is important for understanding the limits of de-dollarisation. BRICS could make it easier for member countries to conduct trade in their own currencies or through an alternative settlement mechanism. That could reduce the need for dollars in particular transactions. But greater use in trade would not automatically make a BRICS currency attractive as a reserve asset.
The difference can be seen in the existing international monetary system. The US dollar is used not only to settle transactions but also to hold official reserves, denominate financial assets, borrow internationally and conduct investment. According to the IMF’s latest COFER data, the dollar accounted for 57.13% of global foreign-exchange reserves in the first quarter of 2026.
This gives the dollar a role that goes beyond its use as a medium of payment. Central banks hold dollar-denominated assets because they need liquid assets that can be accessed and deployed when required. Investors and financial institutions also operate within markets where dollar-denominated assets can be bought, sold and financed at enormous scale.
A future BRICS currency would therefore face two separate tests.
The first would be whether it can be used. That depends on payment infrastructure, banking integration, convertibility and the ability of businesses and financial institutions to settle transactions efficiently.
The second would be whether it can be held. That requires something much more difficult: confidence in the currency’s value, predictable monetary institutions, sufficiently deep financial markets and assets that investors and central banks can readily buy and sell.
This is why international use does not automatically make a currency a reserve currency.
A currency could become useful for trade between BRICS members without becoming a major store of value for the rest of the world. Conversely, a currency may have substantial economic backing but still struggle to attract international holdings if investors cannot easily access its financial markets or are uncertain about its monetary and institutional framework.
There is also a question of liquidity. If a company receives a large amount of a BRICS currency through international trade, it needs somewhere to invest or hold that money. Banks need liquid markets in which they can manage their positions. Central banks need reliable assets for reserve management. International investors need access to markets large enough to enter and exit positions without significant disruption.
This creates a kind of feedback mechanism. A currency becomes more useful when more people use it, but people are more willing to use and hold it when the financial ecosystem around it is already developed. The dollar benefits from this accumulated network of banks, markets, financial instruments and institutions.
That is the real challenge for BRICS.
The bloc could potentially reduce the dollar’s role in selected transactions without producing a currency that rivals the dollar as a global reserve asset. In fact, these two developments could occur simultaneously: de-dollarisation at the transaction level and continued dollar dominance at the reserve and financial-market level.
So the question of whether BRICS can challenge the dollar cannot be answered by looking only at the economic size of the bloc or the possibility of issuing a new currency. The more important question is whether BRICS can generate the demand, liquidity, institutional credibility and financial depth that would make its currency worth holding beyond the transactions for which it was originally created.
And that brings the comparison to its most important benchmark: why does the world continue to demand the dollar in the first place?
Why Is the US Dollar So Difficult to Displace?
The difficulty of challenging the US dollar begins with a simple fact: the dollar is not dominant because it is merely a widely used currency. It is dominant because an enormous financial ecosystem has developed around it.
That ecosystem connects trade, banking, investment, government debt, foreign-exchange markets and central-bank reserves. This creates advantages that are difficult for a new currency to reproduce quickly. The Federal Reserve’s 2025 assessment of the dollar’s international role points to the depth and liquidity of US financial markets, the size of the US economy, openness to capital flows and the availability of dollar-denominated assets as important foundations of its international position.
Deep and Liquid Financial Markets
For an international currency to become important, investors need somewhere to put their money.
The US financial system offers a very large range of dollar-denominated assets across government debt, corporate debt, equities, money markets and other financial instruments. More importantly, these markets are sufficiently deep and liquid that large investors can buy and sell assets without fundamentally changing their prices.
This matters for a reserve currency. Central banks do not simply need a currency that can be used for payments; they need assets that can be stored, accessed and converted when necessary.
A potential BRICS currency would therefore have to develop financial markets capable of absorbing substantial international capital. Creating the currency itself would not create those markets overnight.
The Treasury Market
The US Treasury market is particularly important because US government securities provide a large pool of dollar-denominated assets used by both official and private investors.
According to the Federal Reserve, foreign investors held around $9 trillion, or 32% of marketable US Treasury securities, in the first quarter of 2025.
This creates an important link between the dollar’s role as a reserve currency and the availability of US government securities. A central bank holding dollar reserves can hold those reserves in highly liquid Treasury securities rather than simply keeping large quantities of physical currency.
For a BRICS currency to perform a comparable reserve function, its ecosystem would need an equivalent class of large, liquid and trusted financial assets. That raises another institutional question: what would those assets actually be, and who would issue them?
Global Reserves
The dollar’s position is also reinforced by central banks themselves.
The latest IMF COFER data show that the US dollar represented 56.77% of global allocated foreign-exchange reserves in the fourth quarter of 2025, compared with 20.25% for the euro and 1.95% for the Chinese renminbi.
Reserve holdings matter because they create continuing demand for the currency. Central banks need assets that can be used for international payments, intervention in foreign-exchange markets and broader reserve management.
This also illustrates why challenging the dollar is different from simply reducing its use in bilateral trade. Changing the currency used for some transactions is relatively easier than convincing central banks to restructure their reserves.
Trade and Invoicing
The dollar’s role extends into the way international trade is priced.
An IMF study using data from 132 countries between 1990 and 2023 found that the dollar remained the dominant currency for global trade invoicing, with its overall share remaining broadly stable.
Once businesses across different countries already price contracts, commodities and other transactions in dollars, using the same currency can reduce the need to constantly manage multiple exchange-rate risks.
This creates a network effect: the more widely a currency is used in international trade, the more useful it becomes for other participants in that trade.
International Banking and Borrowing
The same network extends into global banking.
The Federal Reserve estimates that around 55% of international and foreign-currency banking claims and 60% of liabilities are denominated in dollars.
Dollar-denominated borrowing also gives companies and financial institutions access to an established international funding market. Banks around the world therefore maintain relationships with the dollar-based financial system, reinforcing the currency’s position beyond trade itself.
This is an important obstacle for any potential BRICS alternative. It would not be enough for governments to agree to use a new currency. Banks would need to lend it, businesses would need to borrow it, investors would need to trade assets in it, and financial institutions would need mechanisms to manage the associated risks.
Dollar Liquidity in Times of Crisis
The dollar’s role becomes particularly visible during financial stress.
The Federal Reserve maintains dollar liquidity arrangements, including swap lines with selected central banks and the FIMA Repo Facility, which provides an additional source of temporary dollar liquidity to eligible foreign and international monetary authorities. These mechanisms have been used to ease pressure in global dollar-funding markets during periods of financial stress.
This adds another layer to the dollar ecosystem. Its international role is not only about normal economic activity; access to dollar liquidity can also matter when financial markets come under pressure.
A new currency seeking a similar international role would therefore need institutions capable of providing liquidity and managing crises across multiple economies.
The Network Effect
All these elements reinforce one another.
- Trade creates demand for dollars.
- Dollar-based banking creates demand for dollar funding.
- Financial markets provide places to invest those dollars.
- US Treasury securities provide a major reserve asset.
- Central-bank holdings reinforce international demand.
And widespread use makes the dollar convenient for the next participant.
The result is a self-reinforcing financial network.
This is why the dollar’s position cannot be measured simply by asking how many countries use it. Its strength comes from the connections between its different functions.
The IMF similarly describes these as “strategic complementarities”: widespread dollar use in trade encourages demand for dollar assets, while dollar-denominated assets and borrowing reinforce the currency’s role elsewhere in the system.
What Could BRICS Actually Change?
The more realistic question, then, may not be whether BRICS can replace the dollar, but how much dependence on the dollar it can reduce.
That distinction matters because the financial initiatives currently being discussed within BRICS do not require the creation of a single common currency. The bloc has been working on local-currency settlements, cross-border payment mechanisms and greater interoperability between payment systems. Its 2025 Rio Declaration specifically called for continued work on the BRICS Cross-Border Payments Initiative and explored greater interoperability between BRICS payment systems.
This suggests that the first stage of de-dollarisation could take place through existing currencies and financial infrastructure, rather than through a new currency.
Greater Use of Local Currencies
One possible change is a gradual increase in the use of national currencies for trade between BRICS members.
Instead of converting one country’s currency into dollars before completing a transaction, trading partners could increasingly settle transactions directly in their respective currencies, where arrangements and market conditions allow.
This would not eliminate the dollar from international trade. It would, however, create more transactions in which the dollar is not required as an intermediary.
BRICS finance ministers have already supported greater use of local currencies in international trade and financial transactions and have discussed strengthening correspondent banking networks to facilitate such settlements.
The practical significance of this approach is therefore different from that of a common currency. It does not require countries to surrender their national currencies or create a shared central bank. It attempts to make the existing currencies of member countries more usable across borders.
Alternative Payment Systems
The second area is payment infrastructure.
A country can reduce its dependence on the dollar-based financial system without creating a new currency if it develops alternative ways of transferring and settling money internationally.
This is why payment interoperability has become an important part of the BRICS financial agenda. In 2026, BRICS countries were discussing the possible interlinking of fast-payment systems and central-bank digital currencies, with the stated objective of making cross-border payments cheaper and more efficient.
This distinction is easy to miss. A payment system is not a currency.
A payment network determines how a transaction is transferred and settled. The currency determines the unit in which the transaction is denominated. A BRICS payment network could therefore support transactions in multiple national currencies without requiring a single BRICS currency.
India’s own experience with UPI illustrates why payment infrastructure can become strategically significant without being a currency itself. UPI is a payment system, while the transactions themselves can still be denominated in Indian rupees. In 2026, India was also pursuing wider international integration of UPI with payment systems in other countries.
Settlement and Financial Infrastructure
The third layer is more structural: clearing, settlement and financial-market infrastructure.
BRICS finance officials have discussed the feasibility of connecting financial-market infrastructure and exploring an independent cross-border settlement and depository arrangement, referred to as BRICS Clear in the 2024 finance ministers’ and central bank governors’ statement. The initiative was described as voluntary and intended to complement existing financial-market infrastructure.
If such mechanisms develop, they could make it easier for financial institutions within the bloc to conduct transactions without relying entirely on existing international channels.
But there is an important limitation. Building alternative infrastructure does not automatically make that infrastructure globally preferred. Banks and businesses will continue to consider factors such as cost, liquidity, reliability, regulatory compatibility and the number of counterparties they can access through a particular system.
What Would This Mean for the Dollar?
If these mechanisms expand, the most immediate effect would not necessarily be a dramatic decline in the dollar’s international role. A more plausible change would be greater diversification.
Some transactions that currently involve the dollar could increasingly be conducted through local currencies. Some cross-border payments could move through alternative networks. Some financial institutions could gain additional settlement options.
That could reduce dependence on the dollar at the margin while leaving much of the existing dollar-based financial system intact.
This is an important distinction because reduced dependence is not the same as displacement.
The dollar could remain dominant in reserves, international borrowing, financial markets and trade invoicing even while its role declines in particular bilateral transactions.
A More Multipolar Financial System?
The larger consequence could therefore be a gradual shift towards a more diversified international monetary system.
Instead of one currency and one financial ecosystem dominating almost every layer of international finance, countries could have more than one channel through which they conduct trade, payments and settlement.
For BRICS members, that could provide greater financial flexibility and potentially reduce their exposure to disruptions in a single system. But greater diversification could also make the international financial architecture more fragmented, particularly if different payment systems, regulatory frameworks and currencies operate alongside one another without full interoperability.
This is why the outcome of BRICS de-dollarisation may ultimately look very different from the popular image of a “BRICS currency replacing the dollar.”
The more consequential possibility may be much less dramatic: BRICS could help create additional financial channels that make the dollar less necessary for some transactions, even if the dollar remains deeply embedded in the global financial system.
And that brings the question closer to India, because for a country that is already deeply integrated with the dollar-based system, the issue is not simply whether to leave that system – but what additional options a more diversified system could provide.
What Does This Mean for India?
For India, the question is slightly different. The issue is not whether the country should simply move away from the dollar, but whether a more diversified international monetary system would give India additional room to pursue its economic interests.
India is already deeply integrated into the dollar-based global economy. The dollar remains important for India’s trade, investment, external financing and financial markets. That makes a complete shift away from the existing system neither necessary nor particularly relevant to the more immediate question of what India can gain from greater monetary flexibility.
Instead, India has been pursuing arrangements that allow greater use of local currencies while remaining connected to the wider international financial system. India’s Ministry of External Affairs has, for example, described local-currency settlement arrangements as a means of facilitating transactions and supporting the internationalisation of the rupee.
This fits reasonably well with the direction of BRICS’ current financial discussions. The 2026 New Delhi Declaration refers to work on cross-border payment interoperability and trade settlements and investments using BRICS local currencies, while explicitly recognising that countries may have different national priorities and that there is no single approach that fits all members.
Strategic Autonomy
One potential benefit for India is greater strategic flexibility.
If more international transactions can be settled through different currencies and payment channels, India has more options when conducting trade with particular partners. That does not eliminate exposure to the dollar, but it can reduce the need to use the same currency and financial route for every transaction.
This is particularly relevant when geopolitical tensions or financial disruptions affect international payments. Alternative channels can provide an additional layer of resilience, provided they are sufficiently reliable and liquid.
The distinction is important: financial diversification is not the same as financial decoupling.
India can expand the use of the rupee in selected transactions while continuing to participate extensively in dollar-denominated trade and financial markets.
Local-Currency Settlement
Greater local-currency settlement could also reduce the need for an additional currency conversion in some bilateral transactions.
For example, if two trading partners can directly settle an eligible transaction using their national currencies, the transaction may avoid some of the costs associated with routing it through a third currency. The actual benefit, however, would depend on the availability of liquid foreign-exchange markets, banking arrangements and mechanisms for managing exchange-rate risk.
This is why simply agreeing to use local currencies is not enough. The financial infrastructure surrounding those currencies determines whether the arrangement works efficiently at scale.
BRICS’ own recent approach reflects this practical emphasis. Its 2025 declaration focused on fast, low-cost and accessible cross-border payments, greater interoperability between payment systems and settlement infrastructure rather than announcing a common currency.
The Rupee Question
There is also a longer-term question about the international role of the rupee.
Greater use of the rupee in cross-border trade could support its internationalisation, but internationalisation itself is a gradual process. Foreign businesses and investors need reasons to hold rupees, access to financial instruments denominated in rupees, and sufficiently deep markets to manage their exposure.
This brings India back to the central argument of the article.
A currency becomes internationally significant not simply because another country agrees to use it, but because other participants find it useful and sufficiently attractive to hold.
The same principle applies to any potential BRICS currency.
What India May Actually Want?
This makes the idea of India simply choosing between the dollar and a BRICS alternative too simplistic.
A more relevant objective is having more than one option.
India can continue using the dollar where it is efficient and necessary, while simultaneously developing rupee-based settlement arrangements, participating in alternative payment infrastructure and supporting greater interoperability among payment systems.
That approach would allow India to seek greater monetary flexibility without requiring it to abandon the existing global financial system.
And this distinction becomes especially important when considering the wider BRICS project. If the bloc eventually creates a more diversified financial architecture, India does not necessarily have to choose between “the dollar” and “BRICS.” It could potentially operate across both systems, depending on the transaction, the partner and the economic circumstances.
The bigger question, therefore, is not whether India can stop using the dollar. It is how much additional flexibility India can gain without giving up the advantages of its existing integration with global finance.
That also brings us to the biggest problem facing any ambitious BRICS financial project: the members themselves would have to agree on how such a system should actually work.
The Reality Check: What Are the Biggest Obstacles?
The previous sections show that creating a BRICS currency would involve much more than agreeing on a common unit of account. The harder task would be building institutions that could make the currency reliable across economies with very different monetary conditions, financial systems and national priorities.
This is also why the current BRICS agenda should not be confused with a common-currency project. As recently as 2025, Brazil’s BRICS Sherpa said that a common BRICS currency was not under discussion, while the focus remained on reducing transaction costs through local currencies and payment platforms. The 2026 New Delhi Declaration likewise refers to cross-border payment interoperability and trade settlement in BRICS local currencies, while noting that there is “no one-size-fits-all approach.”
If a common currency were nevertheless considered in the future, several obstacles would have to be addressed.
Economic Differences
The first problem is that BRICS economies do not operate under identical economic conditions.
Members can experience very different rates of inflation, economic growth, interest rates and exchange-rate pressures. A monetary policy that is appropriate for one economy may be unsuitable for another.
This is one of the fundamental difficulties of any monetary union. Once countries share a currency, they lose some ability to respond to domestic economic conditions through their own exchange rate or independent monetary policy.
For BRICS, therefore, the question would not simply be whether its economies are large enough collectively. It would be whether their economic structures are sufficiently compatible to operate under a common monetary framework.
Monetary Policy and Liquidity
A common currency would also require agreement over who controls its monetary policy.
Someone would have to determine the supply of the currency, influence interest rates and respond when financial markets come under pressure. There would also need to be a mechanism for providing emergency liquidity to banks or financial institutions.
That creates a difficult institutional question: would individual member countries be willing to give a common authority enough power to make those decisions?
Without such authority, the currency could lack a coherent monetary framework. With it, member states would inevitably give up some degree of monetary autonomy.
Political Governance
Governance could be even more complicated.
BRICS is a group of sovereign states, and a common currency would require rules for decision-making. Who would have voting power? Would every member have an equal vote, or would voting reflect economic size? How would disagreements over monetary policy be resolved?
These questions matter because economic weight within a group is not evenly distributed.
A workable monetary institution would therefore need to balance representation, economic influence and political sovereignty. If members believed that monetary decisions were disproportionately controlled by one or two larger economies, confidence in the system could become difficult to maintain.
Sovereignty
The issue of sovereignty runs through almost every other obstacle.
A national currency gives a government and its central bank considerable control over monetary policy. A common currency changes that relationship. Decisions that currently belong to individual national institutions would have to be coordinated, or in some cases transferred, to a shared framework.
That is a much deeper commitment than simply agreeing to settle some trade in local currencies.
This is also why local-currency settlement and monetary union should not be treated as steps that automatically lead to one another. Countries can cooperate on payments while retaining complete control over their own currencies. A common currency would require a substantially greater degree of institutional integration.
Trust and Credibility
Even if the institutional structure were agreed upon, the currency would still need something that cannot simply be legislated into existence: confidence.
Businesses would need to trust that the currency could be converted and used reliably. Investors would need confidence that its value would remain reasonably stable. Banks would need to know that they could access liquidity when required. Central banks would need to believe that assets denominated in the currency were suitable for reserve management.
This is particularly important because international currencies depend heavily on expectations.
A currency that is technically available but difficult to convert, difficult to invest in or surrounded by uncertainty about its future monetary policy would have limited international appeal.
Geopolitical and Strategic Differences
BRICS also brings together countries with different geopolitical relationships and national interests.
That does not prevent cooperation. In fact, the group already cooperates across several economic and financial areas. But a common currency would require a much deeper level of sustained coordination.
The issue would become particularly sensitive during periods of geopolitical tension. If members disagreed over economic policy or external relations, would they still trust the same institution to manage their shared currency?
A monetary system therefore requires not only economic coordination but a considerable degree of institutional trust between its members.
Financial Infrastructure
Finally, there is the practical question of infrastructure.
A functioning international currency would require banks, clearing houses, settlement systems, foreign-exchange markets, regulatory frameworks and cybersecurity arrangements capable of operating across jurisdictions.
BRICS is already working on some of these areas. Its 2026 New Delhi Declaration notes work on cross-border payment and messaging-channel interoperability and on trade settlements and investments using local currencies. It also highlights the need for digital financial security and cooperation against fraud in cross-border payment systems.
But developing alternative infrastructure is not the same as creating a financial ecosystem comparable to the one surrounding the dollar.
The China Question
There is one additional issue that cannot simply be ignored: how would influence be distributed within such a system?
BRICS contains economies of very different sizes. A common currency would therefore have to address the question of whether economic weight should translate into greater institutional influence.
This becomes particularly relevant because a monetary union requires members to accept common rules even when those rules may not suit their individual interests.
The challenge would be to design a system in which larger economies could not simply dominate decision-making, while smaller economies still had enough confidence in the institution to participate meaningfully.
Three Possible Futures for BRICS De-Dollarisation
The discussion so far points towards an important conclusion: there is no single path that BRICS must follow. A reduction in dollar dependence could take place without the creation of a common currency, while a common currency itself could take very different forms depending on how far member countries are willing to integrate their financial systems.
Three broad scenarios help illustrate the possibilities.
Scenario 1: De-Dollarisation Without a BRICS Currency
The first – and institutionally simpler –possibility is that BRICS members continue expanding the use of local currencies, alternative payment systems and cross-border settlement mechanisms without creating a common currency.
Under this model, the Indian rupee would remain the rupee, the Chinese yuan would remain the yuan, and so on. What changes is the infrastructure through which these currencies are used internationally.
This would allow members to reduce dollar dependence in selected areas without surrendering control over their national monetary policies. It is also broadly consistent with the direction of current BRICS discussions, which have focused on local-currency transactions and payment interoperability rather than an agreed common currency.
The limitation is equally clear. Such arrangements can reduce the need for dollars in particular transactions, but they do not necessarily create an alternative reserve currency. The dollar could remain dominant in global financial markets even as its role declines in some bilateral settlements.
Scenario 2: A Parallel BRICS Financial Architecture
A second possibility would involve deeper financial integration without necessarily replacing national currencies.
BRICS could develop a more extensive network of cross-border payment systems, settlement mechanisms, financial-market infrastructure and perhaps a common settlement unit for certain transactions.
This would be a more substantial development than simply increasing bilateral trade in local currencies. It could create a parallel channel through which participating economies conduct a larger share of their international financial activity.
However, a parallel system would still not automatically become a competitor to the dollar at the global level. Its significance would depend on how widely businesses, banks and investors actually used it, how liquid its financial markets became, and whether participants trusted its institutions.
The result could therefore be a more multipolar financial architecture rather than the replacement of one dominant currency by another.
Scenario 3: A Genuine Reserve-Currency Challenger
The third scenario is considerably more demanding.
For a BRICS currency to become a genuine challenger to the dollar at the reserve-currency level, it would have to move beyond being a mechanism for settling intra-BRICS trade.
International businesses would need to use it. Financial institutions would need to lend and borrow in it. Investors would need access to deep and liquid markets denominated in it. Central banks would need sufficient confidence to hold it as part of their foreign-exchange reserves.
It would also require credible monetary institutions and a large supply of reliable financial assets in which international investors could store value.
This is a much higher threshold than simply creating a currency or increasing its use in trade.
The dollar’s existing position demonstrates why. It is supported simultaneously by US financial markets, Treasury securities, international banking, trade invoicing and central-bank reserves. The IMF’s latest data show that the dollar still accounted for 56.77% of allocated global foreign-exchange reserves in the fourth quarter of 2025.
A BRICS currency would therefore not be competing with the dollar on the basis of currency design alone. It would be competing with an established financial ecosystem.
Which Scenario Matters Most?
These scenarios should not be treated as three mutually exclusive outcomes. The first could develop into the second, and elements of the second could eventually create conditions for the third.
But there is a significant difference in what each would represent.
Scenario 1 would mean less reliance on the dollar for selected transactions.
Scenario 2 would mean the emergence of a meaningful alternative financial channel.
Scenario 3 would mean the emergence of a currency capable of competing with the dollar as an international store of value and reserve asset.
That distinction is crucial. A world in which BRICS conducts more trade in local currencies is not necessarily a world in which the dollar has been displaced. Similarly, a parallel payment network is not automatically a rival reserve-currency system.
Conclusion
BRICS may be able to reduce dependence on the dollar through local currencies and alternative payment systems. But creating a currency is much easier than creating trust, liquidity and global demand for it.
So the real question is not whether BRICS can create a currency, but whether it can build a financial ecosystem capable of making that currency matter.
The contest, ultimately, is not between two currencies—but between two financial ecosystems.
