New Delhi: For a bloc that has spent years fuelling speculation about challenging the dollar’s dominance, the formal position enunciated in a joint statement after meeting of finance ministers and central bank governors of BRICS nations remains more cautious than the rhetoric of some of its members.
There is no mention of a common BRICS currency or a formal call for replacement of the US dollar. Instead, the document sticks to the more incremental, technocratic language the bloc has used since Rio and Kazan: interoperable payment systems, local-currency settlement, and voluntary cooperation among members who “respect national priorities.”
Acknowledge efforts of the BRICS Payment Task Force (BPTF) towards exploring “pragmatic solutions for efficient cross-border payment mechanisms,” the bloc said,”We encourage the BPTF to continue discussions, building on the ongoing work, to facilitate practical solutions for cross-border payments among BRICS countries, which are fast, low-cost, more accessible, efficient, transparent, and safe.”
But statements made by Iranian President Masoud Pezeshkian and Russian President Vladimir Putin on Friday at BRICS Business Forum in New Delhi show why the issue of de-dollarisation remains central to the BRICS debate.
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Pezeshkian made the most direct case for moving away from the dollar. Speaking at the Forum, the Iranian president said BRICS should develop a more resilient network of trade, investment and financing and expand the use of national currencies. He argued that the international financial system’s concentration around a limited number of currencies leaves economies vulnerable to political shocks.
“One of the most important steps is to expand the use of national currencies in trade among the members. This step must be accompanied by the establishment of the necessary instruments for managing currency risks and reciprocal settlements since the current financial system is vulnerable to political shocks due to its concentration on a limited number of currencies,” he said.
Ahead of the summit, Pezeshkian also said BRICS’ financial mechanisms could allow member countries to conduct economic interactions with less dependence on the dollar. He pointed specifically to the New Development Bank and said its financial capacity should help facilitate transactions among members without reliance on the US currency.
For Iran, the issue carries particular urgency. Tehran is under extensive US sanctions and sees greater use of national currencies, alternative payment mechanisms and BRICS institutions as a way of reducing exposure to financial restrictions imposed through the dollar-based system.
Putin’s message at the same Forum was broader but pointed in the same direction. The Russian president said attempts were being made to restrict international trade through sanctions, secondary sanctions and other measures, and argued that BRICS should build what he described as a “new, sustainable platform for global growth.”
Russia has a particularly strong incentive to develop financial channels outside Western systems after sanctions dramatically restricted its access to parts of the dollar- and euro-based financial architecture.
“We acknowledge the work done to study the cross-border interoperability of payment and messaging channels, and the discussions on promoting trade settlements and investments using BRICS local currencies, while respecting national priorities and acknowledging that there is no one-size-fits-all approach,” the joint statement issued after meeting of BRICS finance ministers and central bank governors in Mumbai ahead of the BRICS Summit, said.
It went on to state that the grouping backs continued efforts of the New Development Bank (NDB) “to mobilise resources, expand local currency financing, strengthen project-preparation facilities, diversify funding sources, foster innovation, and support high-impact projects that contribute to inclusive and sustainable growth in member countries.”
DE-DOLLARISATION EASIER SAID THAN DONE:
De-dollarisation would mean settling more bilateral trade in national currencies; linking or improving payment and messaging systems; reducing the number of intermediaries in cross-border transactions; increasing local-currency financing by the New Development Bank; strengthening BRICS financial safety nets; developing guarantees and other instruments to mobilise private capital; and giving members alternatives when sanctions or financial restrictions disrupt conventional payment channels.
The joint statement explicitly asks the New Development Bank to expand local-currency financing and diversify its funding sources. It also supports the BRICS Multilateral Guarantees initiative, which is intended to improve project creditworthiness, lower financing costs and attract private capital into development projects.
But replacing dollar will be difficult if not impossible. The dollar’s position is underpinned by the depth and liquidity of US financial markets, its role in global trade and commodity pricing, and the size of dollar-denominated financial markets.
BRICS members also face their own obstacles. Their currencies are at different stages of internationalisation, many are not fully convertible, and trade between members is often heavily unbalanced.
These imbalances create a fundamental problem for local-currency trade: a country that accumulates another member’s currency needs somewhere to invest or spend those holdings. Without sufficient deep markets, the transaction can ultimately require conversion into a third currency.
India has supported greater use of local currencies and more efficient cross-border payments. At the BRICS Business Forum on Friday, Commerce and Industry Minister Piyush Goyal called for BRICS countries to link payment systems and increase trade in local currencies, while highlighting India’s Unified Payments Interface as an example of payment infrastructure that could facilitate wider cross-border connectivity.
