As the BRICS bloc—Brazil, Russia, India, China, South Africa, and new members like Egypt, UAE, Iran, and Ethiopia—continues to expand, it is also accelerating a bold push to reduce reliance on the U.S. dollar. From trade settlements to infrastructure financing, BRICS+ nations are laying the groundwork for a new global financial system—one that promotes local currency use, strengthens economic sovereignty, and redefines power dynamics in international finance.
The Dollar Dilemma
Since the end of World War II, the U.S. dollar has served as the cornerstone of global trade and reserves—cemented by the Bretton Woods Agreement in 1944, which established the dollar as the world’s primary reserve currency, pegged to gold. Even after the collapse of the gold standard in 1971, the dollar maintained its dominance, especially with global commodities like oil priced in dollars and most international transactions settled in USD.
However, BRICS nations have increasingly voiced dissatisfaction with what they see as a financial system dominated by the West—one that is susceptible to political influence, punitive sanctions, and monetary decisions dictated by the U.S. Federal Reserve.
Inside the BRICS Bank: Building the Backbone
At the institutional level, the New Development Bank (NDB), often referred to as the BRICS Bank, plays a critical role in this transition.
At the institutional level, the New Development Bank (NDB), often referred to as the BRICS Bank, plays a critical role in this transition.
Founded in 2015 and headquartered in Shanghai, the NDB provides infrastructure and sustainable development financing across BRICS and now BRICS+ countries. With a focus on local-currency lending and avoiding the conditionalities imposed by institutions like the IMF and World Bank, the NDB represents a strategic tool for economic independence.
Key features of the NDB:
- Capital base: Initially $50 billion, with plans to expand.
- Local currency lending: Reduces FX risk and dollar dependence.
- Inclusive membership: Open to other emerging markets—like Bangladesh, Egypt, and UAE—deepening South-South cooperation.
- Project focus: Energy, transport, clean water, digital infrastructure—critical enablers of economic self-sufficiency.
While still small compared to Bretton Woods institutions, the NDB’s symbolic and strategic value is growing. Its ability to offer alternative funding routes aligns perfectly with BRICS’ goal of challenging Western hegemony in global finance.
What This Means Going Forward
The evolving BRICS strategy is not about immediate domination, but about building parallel structures—financial, political, and infrastructural—that offer credible alternatives.
The evolving BRICS strategy is not about immediate domination, but about building parallel structures—financial, political, and infrastructural—that offer credible alternatives.
If successful, we may witness a gradual erosion of dollar supremacy, especially in emerging-market trade and development finance. That could have wide-reaching implications: from lower demand for U.S. treasuries to greater volatility in FX markets, and a new level of policy independence for the Global South.
For now, BRICS is planting the seeds of a new order. The dollar isn’t disappearing—but it’s no longer unchallenged.