BRICS rejects dollar challenge: No plans for common currency, but dollar dominance under scrutiny
By willowt // 2025-02-04
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  • The BRICS economic bloc, consisting of Brazil, Russia, India, China, South Africa and new members, has explicitly rejected the idea of creating a common currency to rival the U.S. dollar.
  • Instead, BRICS is focused on developing joint investment platforms to enhance economic cooperation among member states and with third countries, according to Kremlin spokesman Dmitry Peskov.
  • U.S. President Donald Trump has warned BRICS nations against attempting to replace the U.S. dollar as the global reserve currency, threatening tariffs on countries that try to do so.
  • BRICS has made significant strides in reducing dependence on the dollar by establishing a cross-border payment system and expanding the use of national currencies in trade, particularly in response to Western sanctions.
  • While BRICS does not currently plan to create a common currency, its efforts to reduce reliance on the dollar and strengthen financial cooperation may have long-term implications for the global economic order, potentially diminishing the dollar's dominance over time.
The BRICS economic bloc, comprising Brazil, Russia, India, China, South Africa and several newly admitted members, has firmly dismissed speculation about creating a common currency to rival the U.S. dollar. Kremlin spokesman Dmitry Peskov clarified on Friday that the group is instead focused on developing joint investment platforms to enhance economic cooperation among member states and third countries. “BRICS is not considering the creation of a common currency. This has neither been discussed in the past nor is it currently on the agenda,” Peskov stated unequivocally. “Instead, BRICS is focused on establishing new joint investment platforms that will facilitate investments in third countries, as well as mutual investments among member states.” This announcement comes amid renewed threats from U.S. President Donald Trump, who warned BRICS nations against attempting to replace the “mighty U.S. dollar” as the global reserve currency. “There is no chance that BRICS will replace the U.S. dollar in international trade or anywhere else, and any country that tries should say hello to tariffs and goodbye to America!” Trump wrote on his Truth Social platform.

The dollar’s dominance and its challenges

The U.S. dollar has reigned supreme as the world’s primary reserve currency since the Bretton Woods Agreement of 1944. Its dominance has been underpinned by the strength of the U.S. economy, the stability of its financial institutions, and the widespread use of the dollar in global trade and finance. However, in recent years, the dollar’s position has faced growing scrutiny, particularly as Washington has increasingly weaponized its financial systems through sanctions and trade restrictions. Russian President Vladimir Putin has been among the most vocal critics of this trend. At the BRICS summit in Kazan, Russia, in October 2024, Putin described the “weaponization” of the dollar as a “big mistake” that is pushing countries to seek alternatives. This sentiment has been echoed by other BRICS leaders, who have emphasized their commitment to increasing the use of local currencies in international trade and developing alternative payment systems to reduce reliance on the Western-dominated SWIFT network.

BRICS’ strategy: Local currencies and investment platforms

While the creation of a common BRICS currency remains off the table, the bloc has made significant strides in reducing its dependence on the dollar. At the Kazan summit, BRICS leaders pledged to establish a cross-border payment system to operate alongside SWIFT and to expand the use of national currencies in trade. These measures are seen as a direct response to Western sanctions, particularly those imposed on Russia following its invasion of Ukraine in 2022. Leslie Maasdorp, Chief Financial Officer of the New Development Bank (NDB), the BRICS-backed financial institution, underscored this strategy in a July 2023 interview with Bloomberg. “The development of anything alternative is more a medium to long-term ambition,” Maasdorp said. “There is no suggestion right now to create a BRICS currency.” Maasdorp also highlighted the NDB’s efforts to expand its membership and lending capacity, with a focus on climate-related projects. The bank, which already includes Bangladesh and the United Arab Emirates among its members, plans to add several new emerging market countries in 2025.

Trump’s tariff threat: A political gambit or economic reality?

President Trump’s threats to impose 100% tariffs on BRICS nations if they attempt to replace the dollar have been met with skepticism and dismissal by BRICS leaders. Peskov noted that such statements are not new, recalling similar warnings made by Trump during his presidency and after his election victory in November 2024. “In all likelihood, U.S. experts probably need to explain the BRICS agenda in more detail to Mr. Trump,” Peskov quipped. India, another key BRICS member, also downplayed Trump’s remarks. Indian Foreign Ministry spokesperson Randhir Jaiswal reiterated that BRICS operates on consensus and that India has no policy or strategy to de-dollarize. “As far as the dollar is concerned, the question of de-dollarisation, our foreign minister has clearly said that we don’t have such a policy or such a strategy,” Jaiswal said.

The future of BRICS and the dollar

Despite the lack of immediate plans for a common currency, the BRICS bloc’s efforts to reduce reliance on the dollar and strengthen financial cooperation among member states could have long-term implications for the global economic order. A report by Ernst & Young India, published in October 2024, projected that coordinated BRICS policies could gradually diminish the dollar’s dominance in global trade and foreign exchange reserves. For now, however, the dollar remains unchallenged as the world’s primary reserve currency. The Chinese Renminbi, often touted as a potential rival, is still far from achieving reserve currency status, as Maasdorp noted. As BRICS continues to expand its membership and influence, the bloc’s focus on local currencies and joint investment platforms represents a pragmatic approach to reducing dollar dependency without provoking a direct confrontation with the US. For conservatives concerned about the stability of the dollar, the BRICS bloc’s actions serve as a reminder of the need to preserve the dollar’s credibility and avoid policies that could accelerate its decline. In the words of Peskov, “BRICS is not talking about creating a common currency.” But the bloc’s growing economic clout and strategic initiatives suggest that the dollar’s dominance may face more challenges in the years to come. Sources include: RT.com Bloomberg.com IndianExpress.com AA.com
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