President Luiz Inácio Lula da Silva, during the BRICS Leaders’ Press Conference in Johannesburg, 24 August 2023, stated, “We also approved the creation of a working group to study a BRICS reference currency. This measure may increase our payment options and reduce our vulnerabilities.” However, the XV BRICS Summit Johannesburg II Declaration completely changes the narrative, as it tells a different story. Released at the same summit, it instead stated: “We task our Finance Ministers and/or Central Bank Governors, as appropriate, to consider the issue of local currencies, payment instruments and platforms”.
The shift from “BRICS reference currency” to “local currencies” indicates the ideology that the founding members are struggling to conceal. The ideology is the desire to reduce dependency on the dollar. Each founding member is, at most, open to conducting bilateral trade in its own local currency. But this continues to add challenges in the financial ecosystem, as it is a fundamentally different and far less ambitious goal than the one Lula publicly floated.
The lack of a common currency with BRICS creates real friction in practice, as seen in India-Russia trade in late 2022. It led to Russia accumulating large rupee balances during the bilateral trade expansion, which it struggled to use elsewhere, given the rupee’s limited international convertibility. Subsequently, Russia later became less preferable in accepting additional rupee payments and instead preferred Chinese yuan, UAE dirhams, or other more widely usable currencies for certain transactions. This case illustrates an historic example that without a shared common currency, individual states can choose to change the preferred currency at any given time, which can revert to the dollar if that better serves the trading party’s interests. The use of local currencies in bilateral trade is driven by individual convenience and/or necessity. It’s a favourable preference only until it’s not, as it does not act as an alternative to the dollar, which is the global reserve currency. Forming the said alternative would require a coordinated structural mechanism, which BRICS has neither built nor agreed to pursue.
This article argues that the de-dollarisation within the founding members of BRICS is not primarily driven to dethrone the dollar’s dominance. Behind the united front, each founding member reveals its own rhetoric-versus-action gap. The collective rhetoric acts as a mask for divergent national interests and their underlying agendas. De-dollarisation has less to do with reducing dollar supremacy and more to do with out-of-necessity acts, favourable bilateral trade using local currencies and using it as a shield to bring in more allies.
The 2008 global financial crisis originated in the United States and spread across global markets, encouraging several countries to reconsider the risks of excessive dependence on the U.S. dollar. One that turned this to its favour was Russia. The then President of Russia, Dmitry Medvedev, gave a statement in 2009: “We should strengthen the system and create a [global] reserve currency, and we are not giving up on the aim of giving the Ruble the status of a reserve currency”.
In hindsight, Medvedev’s 2009 push for reserve-currency diversification may not be entirely because of 2008 defence positioning. The expert warnings in 2011, from geopolitical analysts, that “Russia wants to annex Crimea and is merely waiting for the right opportunity” were a prediction that materialised in 2014. The precedent for what territorial or political aggression invites was already well established: Iran’s sanctions since 1979, Cuba’s embargo by the U.S. since 1960.
Read against this backdrop, Russia’s early rhetorical distancing from the dollar takes on a different shade. It may have anticipated the consequences of future territorial aggression, positioning itself, however partially, before the sanctions came.
After the Invasion of Ukraine in 2022, sanctions deepened further. Due to this, Russia suffered not only the Ruble crash, skyrocketing inflation, foreign capital flight and the single most severe disruption of long-term international financing for its state-owned oil and gas giants. But also, it was forced to redirect trade toward China and India, settling transactions in yuan, rupees, dirhams, and Rubles. This does not necessarily mean Russia permanently rejected the dollar. It reflected the fact that its access to dollars and euros had been constrained, making the shift from the dollar a matter of necessity, not choice.
After all this, Russia had no option but to make a virtue of necessity by marketing the de-dollarisation wherever possible. From BRICS to G20, from shifting global trade to local currencies. But this was rhetoric. The real gap easily surfaced in 2026, when the US Treasury issued a 30-day waiver easing sanctions on Russian oil “stranded at sea”. Russia immediately enjoyed the advantage and welcomed it. This indicates that no opportunity to re-engage with dollar-based trade goes unwelcomed by Russia. The mask of de-dollarisation exists because of sanctions, not despite them. Russia still waits for the Ruble’s recovery if the sanctions ease; until then, de-dollarisation functions as a coping mechanism, not a destination.
Therefore, Russia’s de-dollarisation is less a sign of complete financial independence and more a defensive adjustment to sanctions. If sanctions were lifted and dollar access became easier again, Russia would still have strong practical incentives to use dollars because the dollar remains the most liquid, widely accepted, and trusted currency for global trade, especially in oil markets.
Brazil’s rhetoric on de-dollarisation has been the loudest among any founding member. Lula proposed a common BRICS reference currency at the 2023 Johannesburg summit. He has since repeated the call at multiple platforms, in the name of making a fairer international financial system which is not entirely dominated by the dollar.
Yet Brazil’s financial system reveals a different narrative. The country continues to hold more than 80% of its foreign reserves in US Dollars. Moreover, Brazil’s major exports like soybeans, oil and iron ore continue to be priced and settled overwhelmingly in dollars, meaning dollar dominance is built into the market Brazil trades in, regardless of its president’s rhetoric.
Months after the U.S. imposed 50% tariffs on Brazilian goods in July 2025, tariffs whose justifications included Brazil’s role in the BRICS push for de-dollarisation. Lula was seen as boldly denying the formation of a BRICS currency to Indian Media in February 2026.
This disconnect is consistent with a broader pattern. Lula’s calls for de-dollarisation indicate participation in the rhetoric of increasing his political base and Brazil’s international standing, but not at the cost of being in rivalry with the dollar-dominant United States.
Shifting the focus to rivalry, India has played the most careful diplomatic game of all. India’s External Affairs Minister, S Jaishankar, has explicitly denied any policy aimed at replacing the dollar. He has instead stated it as the source of international economic stability, emphasising that the world needs more of it and not less. This makes India most openly aligned with standing in favour of preserving the dollar, rather than challenging its system.
India does not want to seek rivalry with the United States; rather, it aims to preserve strong relations with Washington. This caution is shaped by the lived experience of the India-Russia rupee trade track record, where Russia accumulated large rupee balances and later shifted preference toward other local currencies such as the yuan. India is now exercising due diligence to not let the dependency move from Washington to Beijing, or from the dollar to the yuan.
Like any nation, India is also aware that challenging the dollar dominance will lead to risks like economic pressure, including tariffs, from Washington, which India cannot invite for its foreseeable future. For India, opposition to de-dollarisation is therefore driven by two rationales, first being the risk of U.S. retaliation and second, the possibility of replacing dollar dependence with dependence on another currency. A direct rivalry with the United States raises practical economic risks, especially for India’s future growth targets.
In February 2025, India and the United States aimed to double bilateral trade to $500 billion by 2030 by reducing duties and improving market access. Tracking the scale of U.S. investment across Indian sectors and the importance of bilateral ties, de-dollarisation is not strategically in India’s favour at present. India has chosen to protect its long-term economic interests by averting a position that would put those relationships at risk.
India’s stand for a dollar-based system is not a rejection of BRICS alignment or unity, but it is a determined choice to act in favour of self-interest like any other founding member. The key difference is that India’s position has been the most transparent of all founding members, rather than standing behind the collective rhetoric.
China’s self-interest lies in promoting the yuan as a stronger international currency, and it continues to pursue that objective. Beijing has been creating payment routes that reduce reliance on U.S. banks, since much of global trade finance still flows through the dollar. This matters because dollar-based transactions remain within Washington’s reach, making sanctions exposure difficult to avoid.
When the U.S. sanctioned a major Chinese refinery accused of purchasing billions of dollars’ worth of Iranian oil, the refinery reportedly sought to settle future purchases in yuan. Such transactions reduce visibility to Washington and serve two purposes: advancing the yuan’s international role and limiting the impact of U.S. sanctions.
Despite publicly defying the sanctions, China’s own financial regulator quietly told major banks to be on hold for lending new loans to the sanctioned refineries. This indicated that Beijing’s stance against the U.S. has limits once its own banks’ access to the U.S. financial system is at risk.
However, a fully internationalised yuan would require Beijing to loosen capital controls, a step that could expose China to risks it may not be willing to accept, including capital flight. Although Russia-China bilateral trade has expanded, much of this shift reflects necessity rather than a broader replacement of the dollar.
In the larger global financial system, the dollar still dominates. Beijing is therefore building limited corridors outside dollar jurisdiction, where U.S. pressure has less reach. Rather than replacing the dollar, China appears to be testing alternative lanes for bilateral trade where U.S. jurisdiction can be avoided. Its de-dollarisation strategy is therefore selective, aimed at creating workable alternatives to avoid U.S. sanctions.
The founding BRICS members used the rhetoric of de-dollarisation effectively. The intent was not primarily to replace the dollar immediately, but to make BRICS more appealing to states seeking alternatives to Western-dominated financial systems. This helped draw in countries with specific economic and strategic motivations. Iran joined BRICS after years of exclusion from Western banking channels and the SWIFT network. Egypt’s interest is shaped by recurring currency pressures and financing constraints. Other members are drawn because of alternative financing options, energy trade diversification, shifts away from the petrodollar, and the possibility of settling trade in local currencies with countries such as Russia and China.
For Russia and China in particular, this narrative works more in their favour as it opens room to pursue trade arrangements that include reduced exposure to U.S. controlled financial channels. In this totality, de-dollarisation functions less as a unified BRICS project and more as an accommodating political and economic shield for expanding the bloc’s appeal.
There are varying national perspectives behind each founding BRICS member’s approach to de-dollarisation rather than a shared ideology. Russia supports de-dollarisation largely out of necessity, as sanctions have restricted its access to dollar- and euro-based financial channels. Brazil speaks strongly in favour of de-dollarisation, but its financial ecosystem remains deeply tied to the dollar. Its shift in tone after exposure to U.S. tariffs shows the limits of its rhetoric. India cannot be seen as directly opposing the dollar, given the depth of its past, present, and future economic ties with the United States. China is not seeking an immediate replacement of the dollar; instead, it is building limited trade routes where U.S. jurisdiction and sanctions pressure have less reach.
The United States also makes it difficult for any country to openly stand for de-dollarisation. Recent tariff threats against countries challenging the dollar discourage even rhetorical opposition to dollar dominance.
This shows how seriously the United States views any challenge to the dollar’s global dominance. Washington retains significant tools of economic pressure against countries that pursue de-dollarisation too aggressively, including export controls, currency-manipulation allegations, and tariff threats or increases.
Trump has also warned that any state seeking to move away from the dollar as the reserve currency could face tariffs of up to 100%. This reinforces the argument that U.S. economic power remains a major constraint on open challenges to dollar dominance.
This external pressure makes it difficult for BRICS to position a coordinated challenge to the dollar because its founding members were never pursuing a shared goal to begin with. The collective rhetoric of de-dollarisation has functioned as a mask for each member’s own agenda.
Hence, the dollar is likely to remain dominant for the foreseeable future, not because it is impossible to replace, but because it remains preferred. It is deeply embedded in global finance, reinforced by the sanctions system, and BRICS’ own internal disunity makes sustained de-dollarisation difficult to pursue.
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