BRICS leaders gathered in New Delhi with de-dollarisation once again dominating the economic conversation.

While the rhetoric around reducing dependence on the dollar has intensified, the practical reality remains far more complex. India’s position is clear: it favours bilateral local-currency trade and interoperable cross-border payment systems rather than a common BRICS currency or a direct challenge to the dollar.

The term ‘de-dollarisation’, coined in the 1960s by economist Robert Triffin, has gained renewed political charge in recent years. Yet despite decades of debate, moving away from the world’s reserve currency is easier said than done.

The paradox is striking: global discourse on de-dollarisation is louder than ever, but the dollar remains deeply entrenched in international finance. The Bank for International Settlements reported that in April 2025, the dollar was involved in 89.2 per cent of all foreign-exchange trades, while the Chinese renminbi accounted for just 8.5 per cent.

This underlines the distinction between de-dollarisation and diversification. The dollar is losing ground at the margins, but its dominance remains overwhelming.

The IMF’s latest COFER data shows the dollar accounted for 57.13 per cent of global foreign-exchange reserves in the first quarter of 2026, up from 56.42 per cent in the previous quarter. Exchange-rate movements complicate these figures, but the broader trend suggests moderation rather than collapse.

Economists such as Radhika Rao of DBS argue that the most likely outcome is “less exclusive dollarisation” rather than its end. Trade flows are increasingly settled in alternative currencies, particularly the yuan, and the euro is being positioned as another potential alternative.

Yet the dollar’s infrastructure advantage—its deep capital markets, trusted payment systems and global acceptance—remains unmatched.

China’s yuan has emerged as the most visible beneficiary of diversification, with its share of FX turnover rising to 8.5 per cent in 2025. Russia and China have expanded bilateral trade in their national currencies, especially after Western sanctions reshaped Russia’s financial architecture.

However, experts caution that a growing yuan footprint does not equate to a yuan-led global order. The US accounts for only 13–15 per cent of global trade, yet the dollar’s role in invoicing and payments is several times larger, reflecting its embedded position in global finance.

BRICS has never formally declared war on the dollar. Since the 2009 Yekaterinburg summit, the bloc has focused on diversification, local-currency settlement and cross-border payments rather than outright replacement. Mihaela Papa of MIT highlights that the debate is better framed as diversification, not de-dollarisation.

The most promising area lies in interoperable payment systems, which can be achieved without the political impossibility of a joint currency.

India’s approach reflects strategic caution. It advocates bilateral local-currency transactions and integration of central-bank digital currencies to facilitate cross-border payments. Reuters reported ahead of the 2026 summit that India was pushing for such integration, aiming to make transactions easier rather than replace the dollar.

Harsh Pant of ORF emphasises that India does not want to swap American economic hegemony for Chinese dominance, preferring bilateral dealings over bloc-wide monetary projects.

The idea of a common BRICS currency, though politically charged, faces insurmountable hurdles. With 11 diverse economies at different stages of development, the bloc lacks the fiscal and monetary convergence that enabled the euro. Divergent inflation rates, interest regimes and fiscal positions make a shared currency unrealistic under current circumstances.

Diversification, therefore, emerges as the compromise. Many BRICS members remain comfortable within the dollar framework, but bilateral local-currency transactions—such as India-Russia rupee-ruble exchanges—offer a workable path.

The New Development Bank is also expanding local-currency financing, aiming for 40–50 per cent in its 2027–31 strategy, up from 30 per cent earlier. This represents tangible diversification, though not a challenge to dollar dominance.

China’s outsized role within BRICS complicates progress. Its economy and currency dwarf those of other members, raising concerns about imbalance. India, in particular, seeks autonomy without dependence on Beijing. Papa notes that BRICS resembles a China hub with peripheral members, fuelling sensitivities that slow progress.

The most realistic outcome for BRICS is gradual construction of alternatives: more bilateral local-currency trade, greater use of national currencies in development financing, interoperable digital payment systems and expanded cross-border payment options.

This would create more choices without dismantling dollar dominance. Papa concludes that while diversification is advancing, dollar dominance remains strong and unlikely to fade soon. The contradiction persists: BRICS wants alternatives, but its largest members also want their own currencies to gain global influence.

Agencies