President Vladimir Putin is advocating for the expansion of national currency use within the BRICS economic bloc, pushing for an "independent settlement system" to facilitate smoother, more efficient, and safer transactions. This call for an alternative financial architecture highlights a broader trend of de-dollarization and a desire among BRICS nations to assert greater economic independence.
Putin emphasized the increasing role of national currencies in trade between Russia and other BRICS countries. In 2024, settlements in national currencies accounted for 90% of Russia's trade with its BRICS partners. This shift signifies a move away from reliance on the U.S. dollar, which has traditionally dominated international trade. The majority of cross-border settlements were paid in rubles along with other local currencies. "Friendly nations" are increasingly using their own currencies for trade deals, reducing dependence on the U.S. dollar.
The BRICS nations, originally composed of Brazil, Russia, India, China, and South Africa, have been discussing the possibility of a new reserve currency backed by a basket of their own currencies for some time. This concept gained traction during the 14th BRICS Summit in 2022 when Putin announced plans for a "new global reserve currency". Brazil's President Luiz Inacio Lula da Silva has also voiced support for a BRICS currency to finance trade relations among member countries.
While the idea of a common BRICS currency has been floated, the immediate focus is on enhancing the use of local currencies in trade. Some experts believe a full-fledged BRICS currency is unlikely in the short term due to the complexities of integrating diverse economies and political systems. Instead, the development of a BRICS Pay system and similar platforms is gaining momentum as a way to facilitate direct settlement in local currencies. This approach aims to create an institutional alternative that reflects the operational needs and sovereignty concerns of emerging economies.
Russia has been a strong proponent of shifting to local currency payments within the BRICS alliance. China is also actively promoting de-dollarization by encouraging other countries to use its currency for trade and transactions. This push is partly motivated by a desire to create an independent system from the U.S.-dominated financial sector.
The push for de-dollarization and alternative payment systems has been amplified by concerns over the weaponization of the dollar. The freezing of Russia's dollar assets in 2022 served as a "wake-up call," prompting countries to reconsider their reliance on the U.S. dollar as a store of value. This has led to central banks worldwide increasing their gold reserves as a hedge against dollar exposure.
Despite the challenges, the BRICS nations are committed to building a multipolar world with a more balanced global financial system. While a common BRICS currency may not be imminent, the increasing use of national currencies and the development of alternative payment platforms represent a significant step towards reducing dependence on the U.S. dollar and fostering greater economic autonomy within the bloc. The bloc has also created the BRICS Bank in 2015, now known as the New Development Bank (NDB), which mobilizes resources for infrastructure and sustainable development projects in the BRICS and other emerging market economies and developing countries.
