Is This the End of the Dollar’s Global Reign? Russia’s Bold BRICS Proposal Explained!

Russia is once again urging its BRICS partners to distance themselves from reliance on the U.S. dollar. BRICS, originally composed of Brazil, Russia, India, China, and South Africa, has expanded to include 10 countries, now also comprising Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, with several other nations awaiting approval.

Despite its growth, BRICS has yet to make a significant impact. At this year's summit in Kazan on the Volga River, Russian President Vladimir Putin is pushing for the creation of a new global financial payment system that could rival U.S. dominance in global finance and shield members from sanctions.

Proponents argue this system would enable “economic operations without dependency on those who have weaponized the dollar and the euro.” Called BRICS-Bridge, the proposal aims to establish a cross-border digital payment platform run by members’ central banks within a year. With faster and more cost-effective transactions, the platform could lure emerging economies away from the U.S. dollar, raising Western concerns about its potential to circumvent sanctions.

In essence, the system would utilize digital currencies backed by fiat, putting central banks in charge of cross-border payments and eliminating the need for correspondent banks tied to dollar clearing systems. Utilizing blockchain, digital currencies, and tokens, it’s promoted in Russia as a viable alternative to the secure messaging system that facilitates trillions in global bank transactions.

Putin commented, “We are not rejecting or fighting the dollar. But if we are not allowed to use it, what are our options? We are forced to seek alternatives.” Following Russia’s invasion of Ukraine in 2022 and the ensuing financial sanctions, both Russia and other BRICS members—particularly China—are drawn to alternative systems. However, experts suggest that achieving consensus on such a system could prove challenging, as shown by the recent absence of finance ministers from India, South Africa, and China at a BRICS finance ministers’ meeting.

Nevertheless, the proposal is being closely watched outside BRICS. During recent meetings in Washington, D.C., officials from the World Bank and IMF voiced concerns about future fragmentation of the global payments system due to geopolitical divides.

A senior Western central bank official stated, “We’re already seeing Russia and China find ways to handle payments without the dollar. We need to accelerate our work on improving cross-border payments.” Since the start of the Ukraine conflict, Russia’s use of non-Western currencies in transactions has surged from 20% to about 80%.