Following Russia’s exclusion from the global financial system in 2022, efforts to reduce dependence on the US dollar have accelerated and fueled the “de-dollarization” narrative. One of the prominent ideas being discussed by the BRICS nations—Brazil, Russia, India, China, and South Africa—is the introduction of a gold-backed BRICS currency. This proposal is part of broader global moves to challenge the dollar’s dominance in global trade and finance. Let’s assess how much progress the BRICS have made, in the last 2.5 years.
Since the Bretton Woods agreement in 1944, the US dollar has held a central position as the world’s reserve currency, providing the United States with what is often termed an “exorbitant privilege.” This means that the US can settle its external imbalances in its own currency, a luxury not afforded to most other nations. Non-US policymakers have long resented this, but their desire to find a substitute for the dollar gained new urgency after Russia was essentially expelled from the US-centered global financial system in 2022. This shift triggered a reevaluation of the global reliance on the dollar, particularly among non-Western countries.
Despite these efforts, the move away from the US dollar has been slow. Data from SWIFT, the global payments system, shows a minimal decline in the use of Western currencies, with the euro experiencing more reduction than the dollar. Meanwhile, there has only been a modest increase in the use of the Chinese renminbi. Additionally, the International Monetary Fund (IMF) data indicates a slight decline in the share of foreign exchange reserves held in dollars. However, this trend can be viewed from different perspectives.
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