In the following article, which was originally published in China Daily, Endalkachew Sime, a former Minister of Planning and Development in Ethiopia, who is currently studying for his PhD at Peking University, provides a balanced overview of the trend towards de-dollarisation and the role played by the BRICS+ cooperation mechanism.
He notes that it has emerged as a pivotal actor in this regard, adding: “This strategic shift seeks to reduce dependence on the US dollar in international trade, investments and monetary reserves.” But “far from being an antagonistic move against the United States, it represents a pragmatic effort by the BRICS nations to assert financial autonomy and protect their economies from external shocks.” The New Development Bank, established by the BRICS nations in 2015, represents a concrete institutional response to dollar dominance and China’s trade with such major partners as Russia and South Africa have seen significant shifts away from the ‘greenback’.
BRICS nations have also developed alternative payment systems to bypass traditional US-dominated infrastructure. China’s Cross-Border Interbank Payment System and Russia’s System for Transfer of Financial Messages offer alternatives to SWIFT, while India’s rupee-based trade settlement mechanism challenges the US dollar’s dominance in regional trade. These systems enhance financial sovereignty by providing secure, independent channels for international transactions.
Moreover, by diversifying their foreign exchange reserves into alternative currencies and assets – such as the euro, yen and gold – BRICS countries aim to enhance financial stability. Gold reserves have seen particularly dramatic increases.
Sime notes that: “Developing economies face significant risks when their financial systems are closely tied to the US dollar. Changes in US interest rates, quantitative easing, or other monetary policies can trigger capital flows, currency volatility, and economic instability in dollar-dependent economies. By reducing dollar dependence, Global South nations can insulate themselves from these external shocks and maintain greater control over their domestic economic policies. US sanctions have become a powerful tool of economic coercion, particularly against countries such as Russia, Iran and Venezuela. De-dollarisation efforts provide a mechanism for these nations to conduct international trade and finance outside the reach of US sanctions.”
He adds that the current global financial architecture disproportionately benefits developed economies, particularly the US. By creating alternative financial institutions and mechanisms, BRICS nations contribute to a more multipolar system where multiple currencies and financial architectures coexist. This evolution could lead to greater fairness and representation for developing economies in global financial governance.
However, he goes on to warn: “Despite these advances, challenges remain in establishing a fully integrated BRICS financial architecture. The heterogeneity of economic structures, political priorities, and developmental stages among member countries complicates coordination. Furthermore, the US dollar retains its dominance in global finance, and transitioning to alternative systems requires significant investment and institutional development.”
Nevertheless, he concludes: “By creating alternative financial institutions and instruments, BRICS nations are laying the groundwork for a more balanced global financial system. This shift could potentially reduce the effectiveness of the US’ politically motivated unilateral sanctions, enhance financial sovereignty for developing economies, and promote greater stability in international monetary relations… De-dollarisation represents not a threat to the global economic system but an opportunity to create a more resilient and equitable architecture that respects the sovereign economic interests of all nations. For the Global South, this movement is fundamentally about protecting domestic economies from external shocks, asserting financial autonomy, and participating in a more multipolar world order.”
The “BRICS Plus” grouping — Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Saudi Arabia, Iran, the United Arab Emirates and Indonesia — has emerged as a pivotal actor in the global movement toward de-dollarization. This strategic shift seeks to reduce dependence on the US dollar in international trade, investments and monetary reserves. Far from being an antagonistic move against the United States, it represents a pragmatic effort by the BRICS nations to assert financial autonomy and protect their economies from external shocks.
The US dollar accounted for about 58 percent of global foreign currency reserves and 88 percent of the daily foreign exchange market turnover as of 2023. However, this dominance creates vulnerabilities for countries whose economies are closely tied to its performance.
The New Development Bank, established in 2015 with an initial capital of $50 billion, represents a concrete institutional response to the dollar dominance. By 2023, the NDB had approved over $30 billion in funding for infrastructure and sustainable development projects across BRICS nations, with approximately 30 percent of these funds disbursed in nondollar currencies. Further, the Contingent Reserve Arrangement, a $100 billion financial safety net established in 2014, provides liquidity support in nondollar currencies during financial crises. This mechanism helps BRICS nations mitigate the risks associated with dollar volatility and potential capital flight.
Bilateral trade settlements have seen significant shifts away from the dollar. For instance, the share of the US dollar in Russia-China bilateral trade settlement plummeted from nearly 90 percent in 2015 to 46 percent in the first half of 2020, while the use of local currencies in India-Russia bilateral trade surged from 6 percent to 30 percent between 2014 and 2019. Similarly, the renminbi’s usage in South African trade grew by 65 percent in 2016 alone. These changes reflect a deliberate strategy to reduce exposure to dollar fluctuations and enhance trade stability.
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