Can BRICS challenge our dollar-centric global financial system?

We now live in a multipolar world. The center of economic gravity has slowly but surely begun to shift away from the US and the Global North and toward the Global South, particularly towards Asia and its rapidly growing economies. Despite these trends, the architecture of the global financial system remains heavily tilted in favour of the Global North at the expense of the South. But, the expansion of member states in the intergovernmental organisation BRICS means it now represents an increasingly important forum for Global South countries to build a new financial architecture based on increased South-South trade and finance.

The changing landscape of the global economy

The start of Trump’s second term has made it clear that a combination of sanctions and tariffs will be used against various countries - and up to 100% for those aiming to de-dollarise their economy. Not only is this another sign that the ‘Washington Consensus’ era of promoting trade liberalisation and neoliberal policies across the globe is coming to an end, but it shows that the hegemonic position of the dollar, and by extension the US, is increasingly disputed. That Global South countries would seek to reduce reliance on the dollar and challenge the dollar-based International Monetary and Financial System (IMFS) is to be expected, as it entrenches neo-colonial trade relations, leads to debt traps, risks currency crises and financial instability, and reduces the economic sovereignty and policy autonomy of Global South countries. 

Given the macroeconomic benefits that a reduction in dollar dependency can bring, threats from the US are unlikely to deter countries from seeking to increase local currency trade and reduce their dollar dependency. As geopolitical plates shift and the neoliberal order of the global economy disintegrates, organisations like BRICS look to play a key role in building a new financial architecture aimed at overcoming the unjust hierarchies of the dollar-centric status quo.

BRICS expansion

BRICS held its first summit in 2009, attended by the four founding members; Brazil, Russia, India, and China, with South Africa joining in 2010. For 14 years membership remained unchanged, until Egypt, Ethiopia, and major oil producers, Iran and the United Arab Emirates, joined as full members in 2024, with an additional eight partner countries.

The expansion continued in 2025 as Nigeria and Indonesia joined as full members, so the BRICS now represents almost 55% of the global population and 42.2% of global GDP (measured at purchasing power parity). Although representing a majority of the Global South population, the BRICS is far from homogenous, in an ideological or economic sense. Geopolitical alignments, levels of economic development, and the political ideologies of the governments’ differ significantly between the members. In fact, China and India, two of the founding members, are often considered major geopolitical rivals.

Reducing dollar dependency - a unifying goal?

The dominant role of the dollar, and the unjust, neo-colonial hierarchy of the IMFS, has enabled Global North countries to set the terms of trade and finance to their own benefit, resulting in wealth flowing in the wrong direction - from poor to rich - to the tune of over $10 trillion, appropriated from the Global South by the Global North annually.

Despite their differences, the BRICS countries therefore see mutual benefit in improving South-South economic integration, and the group aims to act as a platform for building a new ecosystem of trade and finance that reduces the shackling dependence on Global North-based institutions and interests.

Until recently, the options available for Global South countries to reduce their dependency on the dollar and the Global North have been few and far between, due to the lack of alternatives for securing essential imports and financing from sources other than the Global North. However, many Global South countries have achieved rapid technological and economic development, particularly China, offering new sources for high-tech imports such as electric vehicles, phones, or high-speed rail, previously only available from the Global North. This is mirrored in the emergence of China as the largest bilateral creditor globally, and the rise of South-South development financing from institutions such as the New Development Bank. South-South trade doubled in value between 2007 and 2023, and the BRICS countries now have a larger population, more energy resources, and manufacturing capacity, than the Global North, suggesting there is scope to increase this further. It would have a large effect on the dollar’s global role if even parts of this rapidly increasing South-South trade was facilitated in local currencies rather than dollars.

Reducing dependence on the dollar is by itself not sufficient to overcome the wider issue of financial subordination. However, contemporary efforts to de-dollarise can be seen as part of a longer history of collective strategies by Global South countries to create a more equitable global economy, as articulated in the vision for a New International Economic Order.

Building alternative financial architecture

To reduce dollar dependency, it is necessary to increase South-South trade and financing using local currencies, which is why many recent BRICS summits have focussed on topics related to building alternative financial infrastructures.

Some achievements have already been made. The BRICS Contingent Reserve Arrangement was set up in 2015 as an alternative liquidity provider for members in time of a balance-of-payments crisis. With the aim of increasing South-South provision of development finance, the New Development Bank was also established by BRICS members in 2015, and recently committed to issuing 30% of loans in local currencies to reduce dependence on the dollar. In 2018, BRICS began work on a payment system that would allow members to make international payments in their own currencies, rather than having to use the dollar or other Global North currencies, as is necessary for transactions using US or European payment systems. BRICS countries have also been developing a payment platform for interoperable Central Bank Digital Currencies (CBDCs) called mBridge, which, if fully rolled out, could provide additional benefits including reduced cost, instant settlement, and improved reliability.

While many of these projects are at relatively early stages, and the most ambitious have yet to produce tangible results, they highlight that the areas in which consensus can be reached among BRICS members concern the issue of building an alternative financial infrastructure that increases South-South trade and finance. Increasing the use of local currencies for trade and finance is an integral part of this, and could have significant impacts on the role of the dollar in global trade, given that five of the 10 largest oil producing countries are BRICS members. An increasing number of countries have shown interest in buying and selling oil in local currencies, and BRICS countries have expanded bilateral trade in local currencies in recent years.

BRICS is not a panacea

Although BRICS remains among the most high-profile examples of increasing Global South integration and cooperation, the diverging interests between member states are likely to pose significant challenges for reaching consensus on diverse and complex issues. Additionally, since BRICS does not represent the Global South as a whole, it is questionable to what extent Global South countries that are not members of BRICS will benefit from its policies. Regional integration, bilateral trade agreements, and “forcing democratic reforms to international institutions” to push for cancellation of debt, reforming Special Drawing Rights (SDRs), and reparations, remain essential avenues for Global South countries to achieve climate and economic justice. As discussed in our recent report, ‘Beyond Dollar Dominance’, these are likely to be most effective alongside the development of alternative financial architecture such as new payment systems using local currencies, which certainly also can be built and rolled out without participating in BRICS.  

De-dollarisation strategies by BRICS countries are a piece of a bigger puzzle of efforts in the Global South to build financial alternatives which mitigate against the risks of the dollar-centric IMFS through increased South-South trade and financing. While the dollar will remain important for the foreseeable future, the BRICS initiatives could undoubtedly challenge its absolute dominance if it can deliver on increasing local currency trade and financing among its members and trade partners.

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