Creation of Unified BRICS Currency Threatens Dollar Supremacy in International Trade

BRICS, 27 Oct 2025

Mix Vale | BRICS - TRANSCEND Media Service

Emerging nations are uniting to question the dollar’s reign. The BRICS bloc, along with new members, is intensifying discussions on a unified currency. This proposal gains traction amid geopolitical tensions and economic sanctions exposing vulnerabilities in the current system.

24 Oct 2025 – Emerging nations are uniting to question the dollar’s reign. The BRICS bloc, comprising Brazil, Russia, India, China, and South Africa, along with new members like Egypt, Ethiopia, Iran, United Arab Emirates, and Saudi Arabia, is intensifying discussions on a unified currency. This proposal gains traction amid geopolitical tensions and economic sanctions exposing vulnerabilities in the current system.

Leaders express concern over excessive dependence on a single foreign currency. Trade transactions accounting for over a quarter of global GDP still rely on the dollar, increasing costs and risks for developing economies. The debate, fueled by recent official statements, focuses on practical solutions for bilateral exchanges.

• The common currency would be backed by a basket of national currencies, ensuring balance among members.
• Tests with symbolic notes occurred at recent summits, signaling political commitment.
• Digital payment platforms like BRICS Pay would facilitate transactions without Western intermediaries.
• Currency swap agreements between central banks, such as Brazil and China, already bypass dollar conversions.

Experts note that the Chinese yuan already dominates half of intra-bloc trade, marking an initial step in this direction.

ORIGIN OF THE PROPOSAL IN THE EMERGING BLOC

The idea of a common currency dates back to previous BRICS summits. In 2023, during a meeting in Johannesburg, Brazilian President Luiz Inácio Lula da Silva publicly advocated for alternatives to dollar-mediated trade. This stance echoed in subsequent forums, where the group reaffirmed its commitment to financial diversification.

Russian authorities credit Brazil with pioneering this debate. Foreign Minister Sergei Lavrov recently highlighted that Brazil’s 2025 presidency would prioritize alternative payment systems. This emphasis follows sanctions on Russia, which froze reserves and restricted access to networks like SWIFT.

The bloc has expanded rapidly in recent years. New members, including oil producers like Saudi Arabia and Iran, add weight to the discussions. Together, these countries account for 33.9% of global GDP in projections for 2027, surpassing the traditional G7.

Operational challenges persist, however. Economic disparities among members complicate immediate adoption. China, with massive dollar reserves, remains cautious to avoid global instabilities.

TECHNICAL FEATURES OF THE PROPOSED CURRENCY

Financial engineers outline key features for the new monetary unit. It would function as a weighted basket of national currencies, similar to existing international reserve mechanisms. This structure would prevent domination by a single economy, promoting balance.

Modern technologies would enable the project. Blockchain and central bank digital currencies would form the backbone, allowing instant settlements. The mBridge system, led by the Bank for International Settlements, already tests connections between China, UAE, and Thailand.

• Initial backing in gold and commodities, like oil, for stability.
• Integration with platforms like Brazil’s Pix and Russian national payment systems.
• Liquidity ensured by bilateral agreements, covering 50% of intra-bloc trade initially.
• Transparency via independent audits, aligned with global standards.

Gradual implementation would minimize shocks. Pilots in trade of essential goods, like grains and vehicles, demonstrate real-world feasibility.

India, initially hesitant, now participates actively. Foreign Minister S. Jaishankar stated in March 2025 that there is no plan to replace the dollar globally but supports local options for regional stability.

INTERNATIONAL REACTIONS TO THE INITIATIVE

Western governments monitor the progress closely. U.S. President-elect Donald Trump issued repeated warnings against any attempt to challenge the dollar. In social media posts in January and July 2025, he promised 100% tariffs on products from nations adopting alternatives, calling the bloc “apparently hostile.”

These statements spark debates about the political use of the U.S. currency. Recent sanctions on Russia accelerated the push for financial independence within BRICS. Economists note that the dollar still dominates 80% of global transactions, but its “weaponization” erodes long-term confidence.

In Europe, the EU observes pragmatically. Despite 50.3% of its trade still in dollars, the bloc explores the euro as an alternative reserve. Leaders in Brussels acknowledge that a BRICS currency could fragment global reserves, raising transaction costs initially.

BRICS members respond with diplomacy. President Lula reiterated in August 2025 that the proposal does not aim to confront but to offer choices. “It’s not about replacing national currencies but reflecting a multipolar order,” he stated in an official speech.

ALTERNATIVE PAYMENT MECHANISMS IN TESTING

BRICS Pay emerges as a practical tool to bypass the dollar. Launched experimentally, the platform connects national systems, enabling payments in local currencies. Agreements like the Brazil-China swap, signed in May 2025, already process billions in trades without external conversion.

This infrastructure reduces exposure to exchange rate fluctuations. Central banks test blockchain settlements, cutting intermediaries and costs by up to 30%. In 2025, the Chinese renminbi featured in 50% of intra-bloc trades, per banking communication network data.

• Cost reduction in transactions worth US$15 billion annually with distributed ledger technology.
• Integration with the New Development Bank, funding projects in local currencies.
• Expansion to new members, including Indonesia, covering Asian trade routes.
• Tests with petroyuan for oil payments, involving Saudi Arabia and Russia.
• Risk monitoring via joint committees, avoiding speculative bubbles.

These advances strengthen group cohesion. Brazil’s presidency coordinates technical workshops, gathering experts from all members to refine protocols.

BLOC EXPANSION AND TRADE IMPACTS

The inclusion of new countries accelerates momentum. With 11 members in 2025, BRICS spans half the global population and vast natural resources. This scale amplifies the potential of a common currency, especially in sectors like energy and agriculture.

Intra-bloc trade grew 20% in the last two years, driven by bilateral agreements. Russia, hit by sanctions, leads trades in rubles and yuan, while India explores rupees in partnerships with Brazil. These flows show diversification is already operational.

Projections indicate that by 2027, the group will surpass the G7 in global GDP contribution. This IMF forecast underscores the urgency of autonomous financial mechanisms.

Challenges include capital controls on some currencies. China, with trade surpluses, resists radical changes, prioritizing dollar reserves. However, initiatives like petroyuan for oil signal flexibility.

Lula emphasized at a recent summit that a unified currency would align Global South interests. “We represent a third of global GDP and need to negotiate as equals,” he stated, highlighting barrier-free trade.

ECONOMIC CHALLENGES IN IMPLEMENTATION

Political differences among members test unity. India withdrew partial support in July 2025, citing stability concerns. This hesitation reflects fears that the yuan could dominate, expanding Chinese influence.

Economists warn of liquidity barriers. Currencies like the ruble face international restrictions, while Brazil’s real gains traction via Pix. Solutions involve mutual guarantees and stabilization funds.

The New Development Bank funds studies to mitigate risks. In 2025, it approved US$10 billion in projects, prioritizing local currency payments. This injection boosts infrastructure tests.

• Geopolitical divergences, like U.S.-India relations, require delicate negotiations.
• Need for fiscal convergence, with aligned inflation targets among members.
• Risks of secondary sanctions, monitored by compliance committees.
• Training for banks, covering 80% of participating institutions by year-end.

Despite obstacles, progress is notable. Annual summits, like Kazan in 2024, pave the way for concrete decisions in 2026.

TECHNOLOGICAL ADVANCES IN THE FINANCIAL SYSTEM

Digital innovations accelerate the transition. The mBridge project connects central banks, processing real-time payments. Participants like Hong Kong and Thailand validate efficacy, with test volumes exceeding US$1 billion.

Blockchain ensures immutability and security. Unlike SWIFT, the system avoids centralized points vulnerable to political pressures. Russia integrates its national platform, while China tests the digital yuan at scale.

These tools reduce reliance on Western infrastructure. In 2025, 40% of commodity trades used alternative channels, saving on conversion fees.

South Africa leads efforts in crypto-asset mining, exploring gold-backed digital assets. This approach attracts investments, with the rand gaining relevance in continental partnerships.

Brazil, with Pix, exports expertise. Authorities negotiate integrations with Indian and Egyptian systems, expanding the network to 15 partner countries.

KEY LEADERS’ STANCES

Prominent figures shape the debate. Putin, in a virtual address at the Johannesburg summit, called dedollarization “irreversible.” He highlighted sanctions as a catalyst for financial autonomy.

Lula reiterates the right to plural options. In August 2025, he denied backing down, emphasizing that BRICS unifies the Global South. “We don’t depend on a single foreign currency,” he declared.

Xi Jinping promotes the yuan discreetly. Swap agreements with 40 partners raised its global use to 2% in May 2025. This gradual expansion avoids direct confrontations.

Modi balances positions. Despite pro-dollar statements, India tests rupees in trades with Russia, focusing on regional stability.

These speeches converge on common goals. The rotating presidency ensures continuity, with Brazil coordinating actions until the end of 2025.

PRACTICAL TESTS IN BILATERAL TRADE

Real-world experiments validate concepts. Brazil and China process soybeans and manufactured goods in real and yuan, bypassing the dollar since May. Volume reached US$5 billion, with a 15% cost reduction. Russia and India trade oil for equipment, using rubles and rupees. These barter deals circumvent sanctions, maintaining essential flows.

• Intra-bloc trade volume: US$33 trillion in 2024, 30% in local currencies.
• Projected savings: US$15 billion annually with DLT in half of transactions.
• Energy partnerships: Petroyuan covers 20% of the group’s oil exports.
• Service expansion: Digital payments in tourism and technology.

These cases build confidence. Internal reports show growing adoption, with 70% of member banks adapted.

Saudi Arabia integrates the system to diversify beyond the petrodollar. Negotiations with Iran aim for unity in gas exports.

OUTLOOK FOR GLOBAL TRADE

BRICS influences global flows. With expansion, the bloc attracts observers from Asia and Africa. Membership proposals, like Algeria’s, signal a broader network.

Alternative systems fragment reserves. Central banks diversify holdings, reducing the dollar from 60% to 50% in decadal projections.

Innovations like BRICS Bridge connect payment gateways. This multilateral bridge tests CBDC settlements, covering routes from Eurasia to the South Atlantic.

Opportunities arise in investments. The New Development Bank approves funds in local currencies, financing sustainable infrastructure.

Members prioritize cohesion. Technical meetings resolve impasses, ensuring measurable progress.

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