The US dollar remains at the centre of the international financial system despite calls for monetary diversification. It accounted for 57.13% of official foreign-exchange reserves in Q1 2026, compared with 1.99% for the Chinese renminbi (International Monetary
Fund [IMF], 2026). Its position is stronger in foreign-exchange markets. The dollar was involved in 89.2% of all foreign-exchange transactions in April 2025, and all ten most-traded currency pairs involved the dollar (Bank for International Settlements [BIS], 2025). These figures show how difficult it would be for emerging economies to develop a similarly scaled alternative. The expansion of BRICS therefore raises questions about whether its members can make the international financial system less dependent on a single dominant currency. The question is not whether BRICS can replace the dollar, but whether it can create greater space for other currencies and institutions within the global financial system.

The attempt to reduce dependence on the dollar has developed gradually. Earlier BRICS declarations called for greater use of local currencies and stronger links between members’ payment systems. The 2024 Kazan Declaration supported local-currency financial transactions and further work on the BRICS Cross-Border Payments Initiative (BCBPI). The declaration, however, described the initiative as voluntary and non-binding, while calling for discussion of local currencies, payment instruments, and platforms.

The same approach continued in 2025. The Rio de Janeiro Declaration supported local-currency financing through the New Development Bank (NDB) and work on BRICS payment-system interoperability. It also introduced the BRICS Multilateral Guarantee (BMG) as a pilot within the NDB. The NDB denotes a more developed part of the effort. Its strategy for 2022–2026 set a goal of 30% for its financing to be in local currencies. This leads to diversification of the bank’s longer-term operations rather than remaining simply a political proposal.

The result is a range of mechanisms addressing different parts of international finance. Local-currency lending deals with development financing; payment initiatives address cross-border transactions; and institutions such as the NDB provide channels for financing outside the traditional Bretton Woods system. Their importance will depend on whether they can move beyond policy commitments and become widely used in practice.

The Limits of Moving Beyond the Dollar

The dollar’s scale creates a harder problem for BRICS. Reducing dollar use in individual transactions does not necessarily alter its role in reserves, investment, or foreign-exchange markets. The BIS recorded US$9.6 trillion in daily FX turnover in April 2025, with the dollar on one side of 89.2% of all transactions (BIS, 2025). The dollar’s international role is supported by its extensive use in global trade and finance, its offshore use, and its position as the dominant vehicle currency (BIS, 2024). Developing alternatives is only the first step; getting markets to use them at comparable scale is harder.

There are limits to what BRICS has put into operation. The group’s cross-border payments initiative still focuses on interoperability between national payment systems rather than operating as a single BRICS-wide system (BRICS, 2025). Similarly, the BMG remains a pilot, while other mechanisms involve technical discussions and consensus-building (BRICS, 2025). The NDB provides a more concrete example of financial diversification. Its strategy established the 30% local-currency financing target, and the bank reported in November 2025 that it was on track to meet the target for the 2022–2026 period (NDB, 2022, 2025).

The distinction between these stages is important. BRICS can create additional payment and financing channels without those channels becoming substitutes for the dollar-centred system as a whole. Its members also have different economic priorities, currencies, and financial systems, making deeper monetary integration difficult. This remains visible in current discussions. In August 2026, RBI Governor Sanjay Malhotra said that possible links between BRICS fast-payment systems and central bank digital currencies were still at the discussion stage (Reuters, 2026). For BRICS, the immediate challenge is therefore not simply developing alternatives but making them reliable and attractive enough for businesses, banks, and governments to use them at scale.

India and the Possibility of Financial Multipolarity

India offers a useful example of how this process can develop without making dollar replacement its immediate objective. Its engagement with the NDB has increasingly centred on local-currency financing. During discussions on the bank’s next strategy cycle in February 2026, India’s Department of Economic Affairs emphasised INR and JPY financing, local-currency operations, and NDB bonds in India (NDB, 2026). The rationale is also practical: financing infrastructure in local currencies can reduce the foreign-exchange risks faced by borrowers.

India has simultaneously supported changes to the wider international financial architecture. In 2026, External Affairs Minister S. Jaishankar argued for reform of international financial institutions and stronger representation for emerging and developing economies, while maintaining the importance of existing multilateral institutions (Jaishankar, 2026). India is therefore pursuing both institutional reform and greater use of alternative financial mechanisms. Its efforts to internationalise the rupee and expand local-currency transactions can therefore be understood as part of a broader attempt to give emerging economies more room within the existing system.

India’s BRICS chairship in 2026 provides an opportunity to test how far this approach can be translated into practical cooperation. Discussion surrounding the connection between fast-payment systems and CBDCs demonstrates potential as well as the existing limits. The idea is under active consideration, but it has not become a functioning BRICS-wide mechanism yet (Reuters, 2026).

Conclusion

BRICS is unlikely to overturn the dollar-centric financial system anytime soon. The dollar’s supremacy in reserves and foreign-exchange markets remains fundamentally difficult to match, whereas differences among the BRICS members complicate deeper monetary integration. But the significance of BRICS is not limited to creating a new dominant currency.

The more profound change take place at the margins of the existing system. Local-currency financing through the NDB, along with new payment arrangements and a push to reform global financial institutions, may gradually give developing nations more options in international trade and development financing. The impact depends on how these efforts are implemented, the scale at which they are adopted, and the extent to which cooperation among members can be sustained. If other currencies and institutions are provided with a durable international role, that itself would change the balance of the international system.