The new currency system. Part VII: The New Development Bank and de-dollarization

In July 2014, the leaders of the BRICS countries (Brazil, Russia, India, China, and South Africa) signed an agreement to establish the New Development Bank. Five more countries have since joined the Bank’s membership: Algeria, Bangladesh, Egypt, the UAE, and Uzbekistan. The Bank’s authorized capital amounts to USD 100 billion, with the paid-in portion standing at USD 10 billion.

The NDB has a long-term international investment rating of AA+ from S&P and AA from Fitch—two leading U.S. credit rating agencies. In addition, the Bank holds the highest investment rating, AAA, from Japan’s JCR and China’s CCXI. Such strong financial indicators place the Bank on a par with major international financial institutions such as the Inter-American Development Bank, the International Finance Corporation, the International Bank for Reconstruction and Development, and the Asian Infrastructure Investment Bank.

All this time, as essentially the first major global multilateral development bank founded exclusively by developing countries, the NDB has been mobilizing resources for projects in Global South countries in the areas of clean energy, transport infrastructure, water supply, and environmental protection [URL: https://tvbrics.com/bricslife/no...].

The New Development Bank is one of the most promising mechanisms for de-dollarizing the global monetary system. Local-currency financing is among the key components of the NDB Strategy for 2022–2026 [...tent/uploads/2022/07/NDB_StrategyDocument_Eversion-1.pdf]. In particular, it stipulates that 30% of the Bank’s liabilities in 2026 should be denominated in the national currencies of member countries [...ws/brics-new-development-bank-expands-local-currency-lending-and-green-finance/]. As noted in the Bank’s 2024 annual report, “local currency lending and swaps help reduce exposure to currency and interest rate risk” [https://www.ndb.int/wp-co...].

Lending in national currencies supports the development of domestic capital markets, encourages local-currency financing, and enables BRICS countries to gradually diversify their currency portfolios [https://brics.br/en/doc...].

In the NDB investor presentation published in July 2026, it is noted that the Bank’s active portfolio includes 139 projects with total financing of USD 43 billion. Of the total financing volume, BRICS currencies accounted for 29.3% (Chinese yuan—21.5%, South African rand—6.8%, Indian rupee—1.0%), while the remaining financing was provided in U.S. dollars (59.5%), euros (9.4%), and Swiss francs (1.8%) [https://www.ndb.int/wp-co...].

Thus, the actual data on the use of the national currencies of BRICS member countries are close to the figures stated in the Bank’s strategy. Compared with a year earlier, the share of BRICS currencies in project financing increased by 4.5%.

At the same time, there are clear limits to the de-dollarization of New Development Bank projects due to its operation within the global dollar-based financial architecture. Like other international development banks, the NDB’s paid-in capital does not exceed 10% of the total authorized capital. Therefore, to finance its projects, the NDB additionally raises resources in international capital markets. On average, in the currency structure of international development banks’ borrowings, the U.S. dollar accounts for about two thirds. By comparison, the share of NDB borrowings denominated in U.S. dollars is 63.4%, versus 32.0% for yuan-denominated borrowings and 1% for borrowings denominated in South African rand. At the same time, dollar borrowings are more expensive than yuan borrowings. For example, the coupon rate on bonds maturing in 2027–2029 is 4.0–4.7% in dollars, versus 1.7–3.02% in yuan.

The high share of dollar-denominated financial instruments makes the Bank vulnerable to sanctions and to potential downgrades by U.S. rating agencies, which would automatically raise the cost of refinancing. Evidence of the Bank’s lack of protection from the global financial architecture remains the forced suspension of its activities in Russia since March 2022.

Further de-dollarization of the New Development Bank’s investment portfolio could serve as a signal to the international investment community to fund more actively in BRICS currencies. Strengthening the NDB’s anti-sanctions immunity primarily depends on the development of financial-instrument markets in the national currencies of the BRICS countries.

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