The BRICS alliance (Brazil, Russia, India, China, and South Africa) has taken a revolutionary step in global finance by launching a payment system that does not require the US dollar, marking a direct challenge to Western economic hegemony. Announced at the 2025 BRICS Summit in Kazan, this system enables member nations to settle cross-border transactions in local currencies, bypassing traditional dollar-denominated channels like SWIFT. With intra-BRICS trade exceeding $2.5 trillion annually (BRICS 2025 Economic Report), this move could significantly reduce reliance on the USD, which currently facilitates 88% of global trade (IMF 2025). As geopolitical tensions and US sanctions intensify, the success of this system could redefine international commerce.
Why BRICS Is Challenging the Dollar System
1. Reducing Vulnerability to US Sanctions
Recent US sanctions on Russia and secondary sanctions threats against China have exposed the risks of dollar dependency. The new system allows countries like Russia and Iran (now a BRICS member) to trade oil and minerals without fear of dollar-based financial blockades.
2. Lowering Transaction Costs
Dollar conversions add 3–5% in fees per transaction (World Bank 2025). By using local currencies, BRICS aims to save businesses $75 billion annually in forex costs.
3. Strengthening Local Currencies
The system promotes the use of the Chinese yuan, Indian rupee, and Russian ruble in trade, reducing inflationary pressures from dollar fluctuations.
How the BRICS Payment System Works
The platform, tentatively named BRICS Pay, operates on three key pillars:
1. Digital Currency Integration
Members can settle transactions via central bank digital currencies (CBDCs), with China’s e-CNY and India’s e-rupee serving as primary vehicles.
2. Blockchain-Based Settlement
A distributed ledger system verifies transactions in real-time, cutting processing delays from days to minutes.
3. Bilateral Currency Swaps
Countries exchange local currencies at pre-agreed rates, avoiding dollar intermediaries. China and Brazil already use this model for soybean and iron ore trades.
Progress and Adoption Rates
Since its soft launch in Q1 2025:
- 18% of intra-BRICS trade now uses the new system (BRICS Secretariat).
- China-India trade in rupees and yuan has grown 37% year-on-year.
- Russia now sells 45% of its oil to BRICS partners in non-dollar currencies.
However, challenges remain:
- Liquidity imbalances (India runs a trade deficit with China).
- Lack of convertibility for currencies like the South African rand.
Global Implications: Threat to the Dollar?
While the BRICS system won’t replace the dollar overnight, it erodes USD dominance in key sectors:
1. Commodity Markets
- 60% of Russia-China oil trades now use yuan/rubles.
- Brazil’s soybean exports to China are 30% yuan-settled.
2. Developing World Influence
Over 40 nations have expressed interest in joining BRICS, lured by dollar alternatives.
3. SWIFT Alternatives
The system complements other non-dollar networks like China’s CIPS (Cross-Border Interbank Payment System), which processed $12 trillion in 2024.
Obstacles to Overcome
1. Currency Volatility
The ruble’s 2024 crash showed the risks of relying on unstable currencies.
2. Political Distrust
India remains wary of yuan dominance, preferring rupee-based deals.
3. US Countermeasures
The Dollar Defense Act (2025) threatens sanctions on banks using rival systems.
The Future of BRICS Pay
Experts predict:
- Full implementation by 2027 across all BRICS+ members.
- Expansion to Africa and LATAM via new members like Ethiopia and Argentina.
- Integration with gold-backed currencies, as proposed by Russia.
A Slow but Steady Dollar Decline
The BRICS dollar-free payment system is more than a financial experiment—it’s a geopolitical statement. While the USD will remain dominant short-term, this system plants the seeds for a multipolar financial world. As more nations seek autonomy from US sanctions, BRICS Pay could become the foundation of a new global economic order.