BRICS: Is a future multipolar financial system possible?

BRICS is on a multi-step path toward financial autonomy—expanding member countries, building alternative infrastructure like BRICS Pay, and exploring a shared reserve currency. But real progress remains nascent, and the U.S. dollar retains its dominance—for now.

Still, as trust in Western institutions declines and intra‑BRICS currency flows rise, the bloc’s vision may gain traction. That shift could gradually reshape U.S. and EU currency dependencies over time—if only as one part of a future multipolar financial system.

 

• BRICS has expanded to 11 members, including Indonesia (joined Jan 6, 2025) and partner countries like Egypt, Iran, Ethiopia, UAE, and potentially Saudi Arabia and Turkey.
• At the October 2024 Kazan summit, leaders confirmed plans to explore a new BRICS currency backed by multiple currencies and possibly gold, and pushed forward with BRICS Pay, a blockchain-based payment system.

How it’s progressing

• Discussions ongoing, not execution. BRICS leaders agreed only to study or pilot a shared currency—they haven’t committed to launch.
• Internal constraints remain strong: Divergent member agendas, sanctions (notably Russia, Iran), governance concerns, and logistical challenges limit realistic implementation.
• BRICS Pay system is live in pilot mode, aiming to bypass SWIFT and enable cross‑border transactions in local currencies—with encryption, decentralized messaging, and settlement rails under development.

Impact on the U.S. dollar & EU

• Dollar dominance is under pressure: Over 58–59% of global reserves still in U.S. dollars, but trust is eroding amid U.S. fiscal deficits, inflation exportation, and political instability. This is boosting interest in alternatives like regional currencies or BRICS mechanisms.
• De-dollarization accelerating: Around 20% of oil trades and a growing share of intra‑BRICS trade now conducted in national currencies (e.g. rupee‑ruble, yuan‑real), reducing dollar reliance.
• EU sees a crossroads: Calls emerging in Germany and Italy to repatriate gold and diversify from dollar exposure, part of broader “Global Euro” and regional FX ambitions—though the euro still lags behind in global use.

Why a BRICS currency? Benefits explained

Benefit	Why it matters
Trade efficiency	Settlements in shared currency (or via BRICS Pay) can reduce exchange fees and volatility in intra‑bloc trade.
Sovereignty	Less exposure to U.S. sanctions and dollar “weaponization” through independent payment systems and local currency use.
Global influence	A new reserve asset could position BRICS as a counterweight to dollar‑led financial architecture, especially appealing to Global South countries
Stability via diversification	A basket‑based, potentially gold‑backed currency aims to offer more predictable value than volatile single national currencies

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⚠️ Risks and limitations

• Entrenched dollar ecosystem: U.S. Treasuries, liquidity, legal protections and network effects still heavily favor the dollar.
• Trust barriers: Major Western economies view a BRICS currency skeptically due to concerns over governance, political stability, and past currency manipulation.
• Bloc fragmentation: BRICS spans authoritarian regimes, democracies, and countries under sanctions, complicating both cooperation and alignment.