How the BRICS Currency Could Reshape US Dollar Dominance
The BRICS nations—Brazil, Russia, India, China, and South Africa—are making strides toward introducing a new currency that could challenge the US dollar’s global supremacy. With plans for a blockchain-based payment system and discussions around a gold-backed currency called “the Unit,” the alliance aims to reduce reliance on the dollar and assert greater economic independence.
The Push for a BRICS Reserve Currency
At the 2024 BRICS Summit in Kazan, Russia, leaders explored the feasibility of a shared reserve currency backed by a basket of member currencies or gold. Russian President Vladimir Putin even showcased a prototype BRICS banknote, signaling serious intent. However, Putin clarified that the goal isn’t to abandon the dollar-dominated SWIFT platform entirely but to create alternatives that prevent the “weaponization of the US dollar” through sanctions.
How a BRICS Currency Could Affect the US Dollar
- Decline in Dollar Demand (De-Dollarization)
- Currently, the US dollar dominates 90% of currency trades and most oil trading, though non-US dollar currencies now account for 20% of oil transactions.
- A successful BRICS currency could accelerate de-dollarization, reducing global dependence on the greenback.
- Impact of US Policies & Sanctions
- The trade war with China and US sanctions on Russia and China have pushed BRICS nations to seek financial alternatives.
- If Donald Trump’s America-first policies strengthen the dollar, BRICS economies may double down on their new currency to avoid exchange rate vulnerabilities.
- Shift in Global Trade Dynamics
- BRICS aims to increase financial transactions in local currencies among member states and trading partners, bypassing the dollar.
- A blockchain-based payment system could offer faster, sanctions-resistant trade settlements.
What’s Next for the US Dollar?
While a BRICS currency won’t replace the dollar overnight, its introduction could gradually erode US dollar dominance, especially in emerging markets. If BRICS succeeds in creating a viable alternative, the dollar’s role in oil trading and global reserves may shrink, forcing the US to adapt to a more multipolar financial system.
For investors, monitoring BRICS’ progress is crucial—any shift toward a gold-backed currency or new payment infrastructure could signal long-term changes in global economic power.
Would a BRICS currency weaken the dollar, or will the greenback remain unrivaled? The next few years will be decisive.
