China’s central bank already has one of the most developed digital currencies, the digital Chinese yuan, that is used domestically, including to pay some public-sector salaries. Still, Russia’s foreign minister, Sergey Lavrov, also touted a digital-currency-based settlement system to local media recently — which Granville said was a sign central banks were eyeing the “US-insulated” solution. The Atlantic Council’s recent “Dollar Dominance Monitor” suggests the dollar’s position as the primary global reserve currency remains secure in the near term. However, as more countries seek alternatives to the US dollar—exemplified by China and Russia’s bilateral currency arrangements and similar moves by India, Kenya, and Malaysia—the long-term outlook becomes less certain.
On the other hand, the Federal Reserve and other agencies have shown growing interest in blockchain technology for financial innovation. If widely adopted, CBDCs could enable more direct international trade, bypassing traditional dollar-based payment systems such as SWIFT, further eroding dollar supremacy. However, some XRP advocates believe that clearer regulation in the United States could eventually favor its broader adoption. They argue that its gradual integration into international banking and financial infrastructures could make it a credible alternative to bitcoin. He insists that the BRICS will primarily seek to ensure their monetary independence, which will drive them to prioritize a fully decentralized asset that is immune to American political pressures.
At best, the group might arrive at partial solutions, like pegging local-currency valuations to a reference basket or creating a digital settlement platform to handle cross-border transactions. Created alongside the NDB, the CRA is essentially a $100 billion pool of currencies that central banks can swap to address short-term liquidity shortages. Yet it’s never been used—partly because it’s still denominated in dollars, ironically leaving it constrained if a sanctioned member like Russia needs urgent relief. Observers feel it looks good on paper but, due to minimal usage and complicated approval processes, it hasn’t reshaped global finance as some had hoped. On one hand, regulatory agencies like the Securities and Exchange Commission (SEC) have cracked down on cryptocurrency firms, citing concerns over fraud, volatility, and systemic risks.
Some foresee unstoppable “rebalancing away from the West,” while others see nothing more than a bigger, more unwieldy committee. Ultimately, the impact of a new BRICS currency on the US dollar will depend on its adoption, its perceived stability and the extent to which it can offer a viable alternative to the dollar’s longstanding hegemony. But while the group has considered creating its own currency as part of the solution that is not on the agenda for the summit, the group says. Leaders from BRICS countries meet annually and this year’s summit in Johannesburg, South Africa is expected to be the biggest, with 69 leaders invited. This might just insulate BRICS members and partner countries from a trade war with the U.S. — which has China as one of its main targets.
On the other hand, friction could arise if “anti-West” rhetoric intensifies, complicating the UAE’s ties with Western markets. According to the Atlantic Council, the US dollar is used in approximately 88 percent of currency exchanges, and 59 percent of all foreign currency reserves held by central banks. Due to its status as the most widely used currency for conversion and its use as a benchmark in the forex market, almost all central banks worldwide hold dollars.
There are also concerns that non-Chinese members might increase their dependence on China’s yuan instead. That said, when Russia demanded in October 2023 that India pay for oil in yuan as Russia is struggling to use its excess supply of rupees. The BRICS nations, originally composed of Brazil, Russia, India, China and South Africa, have had many discussions about establishing a new reserve currency backed by a basket of their respective currencies. Several factors, including rising U.S. debt, inflation, and geopolitical tensions, have raised concerns about the currency’s long-term stability.
With such growing global demand, the commodity’s price has already soared, and it is expected to continue to rise significantly. In other words, there is an order of magnitude between world trade and global financial transactions. Given this enormous disparity, it is easier to de-dollarize international trade in goods than it is to de-dollarize savings and investment. The current system is based on existing Western financial infrastructure and the use of reserve currencies.
