BRICS Finance Ministers Strike at the Heart of the Dollar: A Call to Burn the Old Guard

The expansion of the BRICS bloc beyond its original members Brazil, Russia, India, China, and South Africa should reignite focus on the group’s long-standing interest in reducing the dollar’s dominant role across emerging markets. At an August 2023 BRICS summit where Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE) were invited to join the bloc, frustrations with the dollar were an important topic of conversation. Participants discussed how to make BRICS local currencies’ use in commerce and finance within and between emerging markets more attractive than the dollar’s use2—in other words, how to dedollarize.

For over a decade, such ambitions have been a focus of BRICS policymakers. Yet, today, the vast majority of cross-border transactions involving BRICS members and other emerging markets continue to be invoiced in dollars. Exchanging BRICS members’ and recent invitees’ local currencies with each other and with other emerging market currencies often requires using the dollar as an intermediary to be done efficiently, and a large share of public and private debt in these economies is dollar denominated. In short, dedollarization faces serious headwinds. Will expanded BRICS membership and a renewed focus by BRICS members on increasing local currency usage change this dynamic? BRICS finance ministers and central bankers were tasked at the August 2023 summit with considering the issues of local currencies’ use and payments infrastructure and to report back next year.