Data from the International Monetary Fund (IMF) shows a gradual decline in the USD’s share of global foreign exchange reserves. In the 1970s, it accounted for approximately 85% of reserves. According to estimates, by 2022, this share had dropped to 58%.
Currencies such as the Canadian dollar, Australian dollar, and Swiss franc—previously playing modest roles in foreign reserves—now make up a larger share. According to the World Gold Council, there has also been a notable increase in gold purchases by central banks during 2022 and 2023, indicating a move away from reliance on the U.S. dollar.
In the changing economic landscape, de-dollarisation or trade in “non-dollar currencies” poses a potential threat to the value of the U.S. dollar and, by extension, global U.S. economic dominance. There has been a growing emphasis by some countries on building an alternative economic architecture to the existing one dominated by the West, as well as the supremacy of the US dollar. It is the imposition of sanctions in the aftermath of the Russia-Ukraine war which has given a strong fillip to “non-dollar” trade. Talk of an alternative to the existing Western-dominated economic architecture has been on for some time.
Russia-China economic ties and the growing level of non-dollar trade
Russia and China have taken the lead in de-dollarisation due to their geopolitical aims and objectives. In 2023, Russia and China announced plans to increase bilateral trade in non-USD currencies, and this has gained momentum. While commenting on this issue, Russian President Vladimir Putin remarked:
“The deepening of commercial ties is also facilitated by the timely coordinated steps taken in Russia and China to transfer settlements between our countries to national currencies”.
Trade between both countries in 2024 was $243 billion, surpassing the 2023 figure. The share of USD in Russia-China bilateral trade was estimated at 90% in 2015. In 2024, well over 90% of is carried out in Russian rubles and Chinese yuan. Both countries have also launched an alternative cross-border payment mechanism to the U.S.-dominated SWIFT (Society for Worldwide Interbank Financial Telecommunication) system.
It is not just Russia and China, but several other countries have taken steps to promote trade in non-dollar currencies.
In 2022, Iran’s Supreme Leader, Ayatollah Ali Khamenei, had suggested that Iran-Russia trade should be in Non-Dollar currencies. Said Khamenei: “The dollar should be slowly removed from the path of global transactions” and approved the use of national currencies in place of the US dollar for trade with Russia (Tehran Times, July 19, 2022).
Since then, several agreements have been signed between the Central Banks of Russia and Iran to pursue this goal. In January 2025, Russian President Vladimir Putin remarked
“Our countries have almost completely switched to national currencies in mutual settlements, are striving to build sustainable channels of credit and banking interaction, and are working on interfacing national payment systems,
It would be pertinent to point out that over 95% of trade between Russia and Iran, in 2024, was in rubles and Rials. In 2024, trade between Russia and Iran was estimated at $ 4.8 billion.
Steps India has taken pertaining to de-dollarisation
In a changing geopolitical environment, India has taken steps to support local currency trade. The RBI has permitted the opening of Vostro accounts, allowing trade settlements in local currencies with select member nations. A Vostro account is an account held by a domestic bank on behalf of a foreign bank, using the local currency. For example, a Brazilian bank can hold a Vostro account in India and receive payments from Indian importers in rupees. The growing use of such accounts could gradually contribute to de-dollarisation.
In 2023, banks in 22 Countries, including Russia, the UK, Germany, Singapore, and New Zealand, opened Special Vostro Accounts in Indian Banks to Trade in Indian Rupee. The list also included Belarus, Botswana, Fiji, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, Oman, Seychelles, Sri Lanka, Tanzania, Uganda, Bangladesh, Maldives and Kazakhstan. This was further expanded in 2025, wherein the RBI permitted 123 correspondent banks from 30 trading partner countries to open 156 Special Rupee Vostro Accounts (SRVAs) with 26 banks in India to promote bilateral trade in local currencies.
Ninety percent of bilateral trade between India and Russia is taking place in local currencies, and both countries have set a bilateral trade target of USD 100 billion by 2030.
A joint statement issued after the meeting between Indonesian President Prabowo Subianto and Indian PM Narendra Modi — during the former’s India visit in January 2025– highlighted the fact that using local currency would promote bilateral trade between the countries. India also welcomed Indonesia’s membership in BRICS.
It has already begun trade in local currencies with the UAE, which became a BRICS member in 2024. In August 2023, an important step was taken towards strengthening the economic alliance between India and the United Arab Emirates (UAE). The Abu Dhabi National Oil Company (ADNOC) and the Indian Oil Corporation Limited (IOCL) have successfully carried out the first-ever crude oil transaction under the Local Currency Settlement (LCS) framework on August 14, 2023.
It would be pertinent to point out that India has been looking to enhance trade in local currencies with several non-BRICS nations as well.
A Research and Information System for Developing Countries (RIS) paper published in 2019, titled “Trade in Local Currency: Illustration of India’s Rupee trade with Nepal, Iran and Russia” co-authored by Priyadarshi Dash, Monica Sharma & Gulfshan Nizami underscores the fact that while India’s rupee trade with Iran is a recent phenomenon; trade with Russia, Nepal, Iran and other East European countries like Hungary, Rumania, Bulgaria, Poland, Czechoslovakia, East Germany, Yugoslavia in local currencies was carried out from the 1950s till 1980, at a time when India faced severe foreign exchange reserve constraint.
Trump’s comments on BRICS and de-dollarisation
In response to de-dollarisation among BRICS, President Donald Trump threatened to impose tariffs of 100–150% on BRICS nations if they pursued de-dollarisation. In a direct reply, Brazil’s President Lula da Silva stated that “BRICS+ is committed to ending U.S. dollar dominance no matter what.”
Trump’s remarks have not prevented countries from seeking entry into BRICS+. Malaysia, which entered BRICS+ as a partner country in October 2024, is seeking full membership.
Several BRICS members have come out in favour of a BRICS currency. Unlike the geographically cohesive European Union, BRICS nations are dispersed and have divergent geopolitical interests, particularly India and China. While China seeks to reduce Western influence, other members like India, as mentioned earlier, are likely to be wary of a common currency dominated by China, even more so after Beijing’s blatant support for Pakistan during the recent India-Pakistan conflict.
India has categorically distanced itself from a common currency and also refrained from linking de-dollarisation to geopolitical objectives. The Governor of the Reserve Bank of India (RBI) stated that “de-dollarisation is not India’s objective as part of BRICS.” Other senior officials, while supporting trade in local currencies, have categorically stated that India in no way seeks to undermine the US Dollar.
BRICS has also conceptualised a common BRICS Pay system to facilitate retail transactions among member countries; this is feasible and may have more traction amongst BRICS member states. BRICS Pay aims to be an alternative to the SWIFT system, dominated by Western financial institutions. It is a decentralised, independent payment system designed to facilitate international transactions among BRICS member nations in their own currencies. It aims to reduce reliance on the US dollar. It is a payment system initiated by China and Russia and leverages technologies like blockchain and QR codes to create a more secure and cost-effective payment solution.
It would also be important to point out that the strategic direction of BRICS expansion remains unclear, even as many countries express interest in joining the bloc. These internal differences present a challenge to forming a unified monetary or trade policy.
Conclusion
A fully integrated common currency or complete de-dollarisation remains a long-term prospect, possibly decades away. The U.S. dollar continues to dominate the global financial system for now, and divergent views within BRICS further slow the momentum.
India, for example, has explicitly stated that de-dollarisation is not among its BRICS objectives. Nevertheless, BRICS as a powerful economic bloc has the potential to influence global trends and gradually challenge the dominance of the U.S. dollar. Local currency trade and payment systems like BRICS Pay and vostro accounts could reduce the dollar’s artificial high valuation.
While the end of dollar dominance is not imminent, BRICS’ coordinated efforts represent a significant step toward a more multipolar currency landscape. Apart from this, BRICS+ countries can also effectively raise issues relating to the Global South
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