Since the end of World War II, the U.S. Dollar has firmly positioned itself at the center of the global financial system–comprising nearly 58% of global foreign exchange reserves and used in over 88% of all international trade transactions, according to the IMF and BIS, respectively. Yet this longstanding dominance is increasingly under pressure. In a world marked by shifting power dynamics and multipolar geopolitics, the BRICS+ alliance–now expanded to include countries such as Iran, Egypt, and the UAE–is actively advancing efforts to reduce reliance on the U.S.-centric financial order and push towards de-dollarisation. These de-dollarisation initiatives have gained momentum in the wake of pivotal developments, including the freezing of Russia’s dollar reserves and the strategic use of SWIFT-based sanctions. What began as an economic recalibration is now evolving into a broader geopolitical realignment. The central question arises: Can BRICS+ present a credible challenge to the dollar’s hegemony?

The Rise of De-Dollarisation: Catalysts, Cracks, and Consequences

The rise of the de-dollarisation movement stems not only from ideological resistance to Western dominance but also from a convergence of contemporary geopolitical and macroeconomic disruptions that have amplified the urgency for monetary diversification. The U.S. dollar’s supremacy was historically entrenched through the Bretton Woods Institutions, its designation as the global reserve currency, and its foundational role in critical post-war structures like the IMF and the World Bank. This dominance was further solidified in the 1970s with the establishment of the petrodollar system–where oil-exporting nations agreed to price crude in dollars in exchange for U.S. military and economic support, thereby cementing and reinforcing the dollar’s indispensability in global trade.

Yet recent events have called into question the dollar’s perceived neutrality. A turning point came with the U.S. and allied decision to freeze over $300 Billion in Russian central bank assets following the 2022 invasion of Ukraine, signaling to many countries that their sovereign assets are no longer immune to political leverage and that dollar reserves could be politicised. The dollar has increasingly been viewed as an instrument of coercive diplomacy. Similarly, prolonged U.S. sanctions on countries like Iran and Venezuela have further highlighted the weaponisation of financial systems–particularly SWIFT and dollar-clearing mechanisms–as tools of geopolitical leverage and foreign policy.

Simultaneously, domestic economic turbulence within the U.S. – including sustained inflation and aggressive Federal Reserve interest hikes–has disproportionately strained the Global South, compounding debt repayment burdens denominated in dollars. For many emerging economies, these pressures have reinforced demands for monetary autonomy and structural reforms. In this context, BRICS+ has emerged as a focal point for countries seeking to reduce dependency on a dollar-centric system and reimagine the foundations of global finance.

BRICS Moves Towards Financial Autonomy: Local Currencies, Reserve Mechanisms, and Digital Alternatives

In response to the entrenched dominance of the U.S. dollar, BRICS nations are constructing an alternative and parallel financial architecture designed to reduce their exposure to Western monetary influence. At the core of this strategy is a growing shift toward bilateral trade in local currencies, effectively circumventing traditional dollar-based settlement systems. India and Russia, for instance, have finalised agreements to settle oil imports in Indian rupees, a move spurred by Western sanctions that restricted Russia’s access to global banking networks following the Ukraine conflict. Likewise, China and Brazil–two of the largest emerging markets–have formalised currency swap agreements enabling trade settlements in renminbi and real, minimising dependence on U.S.-led financial channels.

These bilateral arrangements are reinforced by the BRICS Contingent Reserve Arrangement (CRA), a $100 Billion financial safety net aimed to provide short-term liquidity support during currency crises–an implicit alternative to the IMF, which has often been criticised for conditionalities perceived as neocolonial by the Global South. The BRICS bloc is also actively considering the creation of a shared currency, potentially backed by a basket of member currencies or tangible commodities such as gold or oil, protecting nations from the volatility of the U.S. monetary policy.

Moreover, digital financial instruments are emerging as potent tools in this strategy. China’s digital yuan (e-CNY), now undergoing large-scale domestic trials and limited cross-border applications, and Russia’s MIR payment system exemplify efforts to build sovereign, insulated payment networks. Collectively, these measures reflect a calculated and multi-dimensional effort to challenge the dollar’s monopolistic role and reimagine the global monetary order through a multipolar lens.

Structural Hurdles and Geopolitical Frictions: Why Replacing the Dollar Remains Elusive for BRICS

Despite BRICS+’s ambitious agenda, significant structural and political impediments stand in the way of displacing the U.S. dollar’s global dominance. First and foremost, the bloc suffers from internal heterogeneity–both in terms of strategic priorities and ideological alignment. Tensions between China and India, notably the 2020 Galwan Valley clash and continuing border disputes in Ladakh, underscore deep geopolitical rifts. Meanwhile Brazil, under President Luiz Inácio Lula da Silva, has oscillated between alignment with BRICS-oriented reforms and pursuing closer ties with Western institutions such as the OECD. Such internal divergences complicate the formation of a unified monetary framework, which is essential for sustaining an alternative global reserve currency.

Unlike the Eurozone, BRICS lacks a centralised monetary authority or fiscal governance framework, making any proposed common currency or financial mechanism inherently fragile. Additionally, the global financial ecosystem remains heavily tilted in favour of the dollar. As of 2024, it accounts for nearly 58% of official foreign exchange reserves, while U.S. Treasury securities continue to serve as the most liquid and trusted assets during periods of global instability. The dollar’s entrenchment spans beyond trade to encompass the architecture of international finance, including central bank reserves, bond markets, and cross-border payment systems.

Moreover, trust, credibility, and legal protectability–pillars of Western financial systems–cannot be replicated overnight. The dollar’s supremacy is as much about confidence and institutional depth as it is about convenience. Thus, while BRICS+ is certainly tilting the balance toward monetary multipolarity, it faces a labyrinth of institutional, geopolitical, and market-based constraints that makes full-scale displacement of the dollar highly improbable in the short term.

Reshaping Economic Sovereignty: BRICS Influence on Emerging Markets and Trade Dynamics

The growing momentum behind BRICS+ de-dollarisation holds significant implications for the Global South, particularly for nations long sidelined by the Bretton Woods system. The bloc’s recent expansion to include energy-rich states such as Saudi Arabia, Iran, and the UAE, as well as major commodity exporters like Argentina and Egypt, is not merely symbolic–it reflects a deliberate pivot towards creating a resource-based financial alternative to Western-led trade and credit systems. By conducting transactions in local currencies, these countries aim to shield their economies from the destabilising effects of the U.S. Federal Reserve policy shifts, which have historically triggered debt crises across Africa, Latin America, and South Asia.

This shift can embolden regional monetary cooperation, particularly in frameworks like the African Continental Free Trade Area (AfCFTA) and ASEAN, where intra-regional trade remains constrained by dependence on intermediary currencies. If paired up with digital payment infrastructure, localised settlement systems could enhance sovereign control over trade, reduce transaction costs, and foster financial resilience. However, the movement towards monetary pluralism also introduces new risks. In the absence of robust institutional frameworks, smaller economies may face heightened exposure to exchange rate instability, fragmented regulatory standards, and liquidity mismatches–particularly if BRICS currencies like the yuan or ruble begin to dominate regional trade without sufficient oversight and coordination.

In this context, while the BRICS initiative offers a pathway towards monetary emancipation for the Global South, it simultaneously demands institutional maturity, macroeconomic discipline, and strategic coordination to prevent new forms of dependency or regional imbalances from emerging.

Balancing Acts: G7 Responses and the Emerging Multipolar Monetary Future

As BRICS+ accelerates its push towards de-dollarisation, the Western response has been equally strategic and multifaceted–designed to preserve the existing financial architecture while subtly adapting to the new multipolar reality. The G7 economies, spearheaded by the United States and the European Union, have advanced strategies centered on economic resilience, “friendshoring,” and supply chain diversification–a clear effort to reduce reliance on geopolitical rivals like China and Russia while reinforcing alliances with like-minded democracies. This is particularly evident in the U.S. Inflation Reduction Act and the EU’s Global Gateway initiative, both of which aim to strengthen industrial autonomy and channel investment within trusted geopolitical blocs.

At the same time, multilateral institutions like the IMF and the Bank for International Settlements (BIS) are evolving rapidly to maintain their centrality. The IMF is actively researching the integration of Central Bank Digital Currencies (CBDCs) into cross-border payment systems, a potential response to BRICS’ digital yuan and MIR systems. Meanwhile, Western powers have stepped up diplomatic engagement with more geopolitically flexible BRICS members–particularly India and Brazil–leveraging trade agreements, defense cooperation, and technology partnerships to subtly weaken intra-BRICS unity.

Still, even with this strategic pushback, the trajectory towards a more diversified global currency landscape appears irreversible. While the U.S. dollar is unlikely to lose its primacy in the near term, its unrivaled dominance is steadily being chipped away. The international monetary system is moving towards a multipolar configuration–one where competing spheres of influence coexist, yet continue to operate within a framework where Western legal norms, capital markets, and governance models still anchor the core architecture.

Conclusion

In summation, BRICS+ has undeniably disrupted the narrative of dollar unipolarity by laying the groundwork for a multipolar monetary world. Through bilateral trade in local currencies, digital payment alternatives, and strategic bloc expansion, it has articulated a credible challenge to Western financial dominance. Nevertheless, persistent hurdles remain. Internal divisions, underdeveloped financial institutions, and the enduring inertia of global markets constrain the immediate prospects of full-scale de-dollarisation. The dollar embedded in trust, liquidity, and legal coherence, remains unrivaled in the short term. However, the trajectory is clear: we are entering an era of pluralistic monetary governance, where financial power is no longer the sole province of the West. The real question is not whether the dollar will fall–but how the global economy will adapt to shared monetary sovereignty. 

.    .    .