The New Currency System. Part III: The BRICS Countries on the Horizon

The emergence of the BRICS group, like several other international associations—from the League of Arab States to the European Community—can be traced back to British initiatives. The term BRIC was coined in 2001 by British economist Jim O’Neill, who at the time headed global economic research at the investment bank Goldman Sachs.

According to O’Neill’s concept, the four BRIC countries (Brazil, Russia, India, China), symbolizing fast-growing emerging markets, were expected to join the Group of Seven (G7) to help smooth imbalances in global interaction between developed and developing countries. However, the G7 was not ready for restructuring at the time, and BRIC gradually evolved into an independent global player. In 2010, after South Africa joined, the name was changed to BRICS. In 2024, the group expanded to include Iran, the UAE, Egypt, and Ethiopia, and in 2026, Indonesia joined.

It should be noted that the BRICS members have little in common in terms of internal development. Nearly all of them represent unique civilizations located in different geographical regions. They have different systems of government, economic models, and foreign policy objectives.

Notably, in the past all BRICS members (except Russia and Brazil) were colonies or were under direct or indirect control of the British Empire.

Today, these countries are united by their aspiration to create a multipolar world. Dedollarization of bilateral settlements is one of the key instruments in moving toward this goal.

In 2019, national currencies accounted for 15% of trade among BRICS countries. By 2025, 67% of their mutual settlements were conducted in national currencies, with mutual trade turnover exceeding one trillion dollars. Thus, the use of national currencies in bilateral settlements has increased more than fourfold over six years.

Clearly, the driving forces behind the transition to national currencies in BRICS trade have been Western sanctions, as well as the “toxic” characteristics of investing in dollar reserve assets, which became evident during the global financial crisis of 2008–2009.

Currently, BRICS countries account for nearly 40% of global GDP calculated at purchasing power parity, and by 2035–2040 this proportion may rise to half of the world’s gross value added. Their share of global exports of goods and services could increase from the current 21% to 30%. Such dynamics create the need for their own reserve currency to enable settlements without relying on “toxic” currencies. In theory, options for backing a collective BRICS monetary unit include a basket composed of member states’ currencies, as well as a mixed basket including gold and commodities.

Meanwhile, the creation of a global BRICS payment system based on a new reserve currency is complicated by the challenge of reaching consensus on equal participation of BRICS countries in the formation and distribution of new liquidity. Another limitation is the competitive demand for such a payment system amid the parallel use of the dollar and euro, which remain the primary currencies for international trade outside the BRICS group. A third barrier is the threat of U.S. sanctions.

Despite these challenges, BRICS countries do not intend to stop at what has been achieved. At the 2024 BRICS summit in Kazan, an initiative was announced to advance toward deeper monetary and financial integration through the creation of a digital financial ecosystem. This includes their own payment system, a financial messaging system, a digital bank, clearing and settlement infrastructure, a unified digital monetary unit, and a reinsurance company.

The transition to practical implementation of these initiatives will require diplomatic skill from BRICS to overcome geopolitical, macroeconomic, and institutional barriers. However, the culmination of these efforts could be the creation of a genuine global alternative to the current standard of the world monetary system.

Author: Doctor of Economics, Professor of the Department of World Economy and World Finance at the Financial University under the Government of the Russian Federation Alexey Vladimirovich Kuznetsov.