BRICS' Local-Currency Settlement Plan Is A Push Towards De-Dollarisation

The BRICS' push to expand trade in national currencies and develop alternative cross-border payment mechanisms is gathering pace, raising questions over whether the grouping is moving towards de-dollarisation.

BRICS finance ministers and central bank governors, in their joint statement on September 10, said members were examining the interoperability of payment and messaging systems and promoting trade settlements and investment using local currencies. They also stressed that there was "no one-size-fits-all" approach and called for payment mechanisms that are "fast, low-cost, accessible, efficient, transparent and safe".

The statement also backed a larger role for the New Development Bank (NDB), including greater local-currency financing, diversified funding sources and mechanisms to mobilise private capital.

Together, these measures could reduce the use of the US dollar in intra-BRICS trade and financing, even though the joint statement does not explicitly call for de-dollarisation or proposing a common currency.

Dollar's Dominance & De-Dollarisation

De-dollarisation refers to a sustained reduction in the use of the US dollar in global trade, financial transactions, foreign-exchange reserves and international funding.

Even though countries are trying to reduce dependence on the US dollar, it remains dominant in foreign-exchange transactions, trade invoicing, international payments and international debt issuance, despite a gradual diversification of official reserves.

The dollar’s central role also gives the US considerable influence over global financial infrastructure. This includes the ability to impose sanctions and influence access to key payment channels.

Countries that rely heavily on dollar-based transactions can also face currency-conversion costs and exchange-rate risks when their domestic currencies move sharply against the dollar. BRICS’ local-currency push therefore seeks to reduce some of these vulnerabilities rather than immediately replace the dollar as the world’s reserve currency.

Common BRICS Currency Is Still Unlikely

A BRICS currency would require considerably deeper monetary and financial integration. A common currency would need a central monetary authority, common fiscal rules, a shared monetary policy and closer coordination of exchange rates.

The economic differences between BRICS members make such an arrangement difficult.

India is therefore more likely to support bilateral settlement in national currencies and interoperable payment systems than a yuan-led monetary arrangement, according to a report by Global Trade Research Initiative (GTRI).

Russia, meanwhile, has explicitly rejected the idea that it is pursuing de-dollarisation. Kremlin spokesperson Dmitry Peskov said Russia was open to every acceptable payment method, while noting that 90% of transactions between Russia and BRICS nations were conducted in national currencies, as per a report by Reuters.

How Can Local-Currency Trade Help India?

For India, greater use of the rupee in bilateral trade could potentially support exports and financial flows while reducing dependence on the dollar for routine transactions.

The local-currency settlement can help India expand trade and financial flows if transactions are invoiced in rupees, said Michael Debabrata Patra, former RBI Deputy Governor.

"To the extent it boosts exports, India’s GDP will get a boost. Also the fear of sanctions associated with the dollar based system will be obviated," Patra said.

However, practical complications are also there. For instance, if bilateral trade is heavily imbalanced, the currency of the surplus country can accumulate in the deficit country without an obvious avenue for use. "The challenge would be to secure roughly balanced trade so that local currency balances don’t pile up in countries which run persistent surpluses with the other trading partners," he added.

In that case, Patra said that countries with persistent trade deficits may have to allow capital-account transactions in local-currency settlement. "Illustratively, India may need to allow Chinese exporters to invest surpluses in G-Secs (Government Securities)."

BRICS Trade Figures At Glance

The scale of the challenge for reducing dollar dependence remains substantial and this is visible in the trading numbers.

According to GTRI, India’s trade with BRICS increased from $203.1 billion in FY2021 to $417.5 billion in FY2026, but the trade deficit widened from $74.5 billion to $226.1 billion.

India’s exports to BRICS rose 48.8% to $95.7 billion, while imports jumped 131.8% to $321.8 billion.

The bloc’s overall trade footprint is much larger. On September 11, at the BRICS Business Forum in New Delhi, India's Commerce and Industry Minister Piyush Goyal said BRICS exports had increased from about $900 billion in 2003 to $6 trillion in 2024, with its share of global exports nearly doubling to about 24%, per PTI.

Yet GTRI noted that intra-BRICS trade accounts for only about 4–5% of world trade, with China dominating the network. This limits the immediate potential for a bloc-wide alternative to the dollar.

CBDCs Could Be The Next Step

BRICS is also exploring central bank digital currencies (CBDCs) and links between domestic payment systems.

The joint statement said central banks were studying cross-border payment interoperability, while a separate central-bank workstream is examining FinTech, cybersecurity, artificial intelligence and emerging technologies.

India has favoured linking CBDCs and using national currencies rather than creating a single BRICS payments system. According to a report by Bloomberg, India is unlikely to back a unified bloc-wide payments network that could be perceived as an anti-dollar initiative. However, it is pushing for centralised digital currencies.

What Happens Next?

ASSOCHAM estimates that India’s exports to BRICS, which stood at about $96 billion in FY2025-26, could rise to $200 billion by 2030 if market access, production capabilities, value chains and settlement systems improve.

The direction, therefore, is less about replacing the dollar overnight and more about creating alternatives around it.

Greater local-currency trade, CBDC-based settlement, domestic payment-system links and NDB financing could gradually reduce dollar use in selected transactions.

Hence, the dollar’s dominance remains secure for now because of the depth, liquidity and global reach of US financial markets. BRICS may chip away at its use in specific trade corridors, but replacing the dollar at the centre of the international financial system remains a much bigger challenge for now.