How BRICS Aims to Upend the Hegemony of the Dollar

Since its inception, BRICS has functioned as a platform through which nations outside the imperial core articulate their rejection of the current global economic order built around institutions such as the IMF and World Bank, which often impose neoliberal policies on developing nations through structural adjustment programs and conditional debt relief. Instead of relying on these institutions, BRICS members have pushed for multipolarity, alternatives to dollar dependency, and regional development financing. With the 2014 creation of the New Development Bank (NDB), BRICS began offering infrastructure loans without the austerity demands made by the IMF. The NDB, now open to non-BRICS nations, provides a viable option for states seeking capital outside of Western-controlled financial institutions. The significance of the NDB lies not only in the volume of lending but in the clear ideological shift it represents, moving toward decolonizing finance and ending what many in the Global South see as a form of neoimperial economic control.

The dollar has long served as the linchpin of US global power, underpinning everything from the petrodollar system to international reserves in countries like Japan. This hegemony has allowed the United States to impose extraterritorial sanctions, run persistent deficits, and fund its war machine with relative impunity. Russia and China, two of the most geopolitically assertive BRICS members, have accelerated efforts to conduct trade in local currency, especially in energy markets, which threatens to bring this impunity to an end. By 2022, over 70 percent of Russia-China trade was conducted in rubles and yuan. Similarly, India has begun purchasing Russian oil in rupees and is even negotiating similar currency arrangements with other BRICS states. In 2023, China and Brazil announced a deal to trade directly in yuan and reis, thereby bypassing the dollar entirely. The BRICS Pay system, though still in its early stages, is designed to create an integrated digital platform for cross-border financial settlements using local currencies, reflecting a serious commitment to building a parallel monetary infrastructure that could eat away at the dollar’s supremacy over time.

What has shielded the United States for decades from fiscal consequences has been the dollar’s status as the world’s reserve currency, thereby allowing the US to print money to finance its wars, bail out banks, and subsidize corporations, all without inflationary consequences that would be faced by other nations. Should BRICS-led de-dollarization gain momentum, this privilege would be curtailed; demand for US Treasuries could fall, leading to higher interest rates; and the cost of imports would rise, feeding domestic inflation. By weakening the dollar, the United States’ ability to weaponize its financial system against political adversaries through things like asset freezes, sanctions, and control over SWIFT payment access, would be threatened. And while some US lawmakers downplay the risks posed by BRICS, it is clear that they are banking on the belief that the dollar is unassailable, which ignores the global shift currently underway. A dollar decline would expose the US economy to immense structural implications including stagnant wages, deindustrialization, and push it towards a service sector dependent economy. The current global financial system has long disproportionately benefited Western capitalism at the expense of the Global South, and many in the Global South see BRICS as a new way to forge economic sovereignty and resist US-led privatization and austerity measures. 

If managed correctly, de-dollarization could weaken US imperialism and open the door to more just economic arrangements for nations who have long suffered under the boot of the imperial core. BRICS could be a seismic shift in the architecture of global capitalism, but it should not be the only strategic challenge to expose the fragility behind the United States’ economic dominance. As scholar and historian Vijay Prashad argues, the challenge to the dollar must not end with an effort led by Russia and China who have their own issues with imperialism. It must go further to imagine a new world beyond exploitation, war, and the tyranny of the market.