Context

• The BRICS members are quietly working on an alternative payment channel which will coexist with the dollar.

About

• The BRICS summit 2025 has drawn to a close with the usual commitment to forge cooperation in the Global South and the expected tirade from Donald Trump. 
• But there was plenty of drama ahead of the summit, with the Indian government going to great lengths to clarify that members of the bloc are not conspiring to dethrone the dollar.
• The MEA Secretary had clarified that the members are only evaluating alternative channels to trade in national currencies to protect themselves from geopolitical vulnerabilities and that it should not be construed as a move towards 'de-dollarisation'.

BRICS Strategy: Stealthy De-Dollarisation

• Despite denials, BRICS is actively working to reduce dollar dependence. While a common BRICS currency is deemed unlikely soon (due to internal reluctance, especially from India and China, and US pressure), the bloc is pursuing alternatives:
• Increased Local Currency Trade: Members are settling more bilateral trade in their own currencies (e.g., India with Russia, UAE, Iran; China settling 30% in Yuan).
• BRICS Pay: An operational alternative to SWIFT, spearheaded by Russia and China, linked to 75 countries and enabling settlements in 23 currencies (including members' currencies and the dollar).
• It uses domestic payment systems for speed.
• BRICS Expansion & Growing Clout: The bloc's power has surged significantly due to recent additions (Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia, UAE) bring total membership to 10. 
• Combined, they represent 29% of global GDP (PPP), 48.5% of the world's population, 36% of Earth's territory, 72% of critical rare earth minerals, 43.6% of global oil, and 36% of natural gas production.
• The Russia-Ukraine war acted as a catalyst for the bloc's importance.A new "Partner Countries" category (10 nations) was also created.

Significance of BRICS Currency 

• BRICS aims to increase the Global South's influence in international institutions (UN, IMF, World Bank, WTO), making them more legitimate and equitable. This goal resonates with many developing nations.
• Future Outlook: BRICS is methodically building alternative financial channels ("brick by brick"), focusing on reducing dollar reliance without direct confrontation.
•  Finance ministers are tasked to continue developing payment system interoperability. The long-term success in challenging Western-led institutions remains uncertain and will depend on adoption and effectiveness over time (results expected in ~10 years).

Way Ahead

• Accelerate Adoption: Actively encourage all BRICS members and partner countries to integrate into BRICS Pay for cross-border settlements.
• Expand Functionality: Move beyond trade settlements to include investment flows, remittances, and potentially capital markets over time.
• Enhance Interoperability: Implement the BRICS Payment Task Force's (BPTF) recommendations to seamlessly connect national payment systems (like India's UPI, Brazil's PIX).
• Negotiate more government-to-government and central bank agreements enabling direct trade in national currencies, bypassing the dollar.
• Liquidity Mechanisms: Develop robust currency swap lines between BRICS central banks to ensure sufficient liquidity for LCS and manage exchange rate volatility.
• Incentivize Businesses: Provide tax benefits, simplified regulations, and guarantees to encourage private sector use of LCS.