BRICS AND THE DOLLAR QUESTION
From
De-Dollarization to Financial Optionality: How Far Can BRICS Reshape the Global
Monetary Order?
A Case-Cum-Research Study of Local-Currency Trade, NDB Finance, CBDCs, BRICS Payments and India’s September 2026 Strategy
Abstract
The debate over BRICS and
de-dollarization has often been framed as a contest between the US dollar and a
prospective BRICS currency. This interpretation is too narrow. The evidence
through September 2026 suggests that BRICS is not constructing a single
replacement for the dollar; rather, it is gradually creating a multi-layered
financial ecosystem based on local-currency settlement, alternative payment
infrastructure, development finance, central-bank digital currencies (CBDCs),
reserve diversification and greater institutional autonomy.
The September 2026 BRICS agenda is
particularly important because India, as BRICS chair, is advocating greater
interoperability among members' CBDCs and cross-border payment systems ahead
of the New Delhi summit on September 12–13, 2026. At the same time, India has
emphasized that the objective is faster and cheaper settlement rather than
replacing the dollar as the world's reserve currency.
This paper examines whether BRICS
de-dollarization represents a genuine structural transformation or primarily a
diversification strategy. Secondary data from the IMF, BIS, World Bank, BRICS
and New Development Bank are analysed. A 2015–2024 trend regression of the US
dollar's share of global official reserves shows a statistically significant
downward trend, while the renminbi's reserve share increased from virtually
zero before its inclusion in COFER to above 2% in recent years. However, BIS
data show that the dollar remained on one side of 89.2% of global
foreign-exchange transactions in April 2025, demonstrating that reserve
diversification has not translated into displacement of dollar dominance in
global FX markets.
The study concludes that the most
realistic BRICS outcome is financial optionality rather than dollar
replacement.
Keywords: BRICS, de-dollarization, US dollar, local currency
settlement, CBDC, BRICS Pay, NDB, India, multipolar financial system, global
finance.
1. Introduction
The international monetary system is
undergoing a gradual transformation.
For decades, the US dollar has
occupied a uniquely powerful position in international trade, foreign-exchange
markets, banking, reserves, commodities and financial markets. Yet the growing
economic weight of emerging economies has generated increasing demand for a
more diversified monetary architecture.
BRICS has emerged as one of the most
important platforms through which this debate is taking place.
The central question is therefore
not:
Will BRICS replace the dollar?
A more meaningful research question
is:
Can BRICS reduce the world's
dependence on the dollar by creating credible alternatives for trade
settlement, development finance, reserves and cross-border payments?
This distinction is crucial.
The official BRICS framework
describes the group as a coordination mechanism among Global South countries
rather than a formal monetary union. The group currently has 11 members:
Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, Saudi
Arabia, the UAE and Indonesia.
2. Evolution of BRICS
BRICS originated as BRIC, consisting
of Brazil, Russia, India and China. The first BRIC leaders' summit was held in
2009, while South Africa subsequently joined, creating BRICS.
A second major expansion followed
the 2023 Johannesburg Summit, with Saudi Arabia, Egypt, the UAE, Ethiopia and
Iran joining from 2024. Indonesia formally became a full member in January
2025.
The enlargement dramatically
increased BRICS' demographic, energy, commodity and economic weight.
According to the official BRICS data
platform, the enlarged group accounted for approximately 39% of global GDP
on a PPP basis in 2023, while its members represented about 24% of global
trade.
This gives BRICS substantial
potential bargaining power—but economic size does not automatically produce
monetary dominance.
3. Research Problem
The principal research problem is
the gap between:
BRICS' growing economic weight
and
its comparatively limited monetary
and financial influence relative to the US dollar.
Three questions therefore arise:
Has the dollar's international position actually weakened?
Are BRICS local-currency mechanisms capable of reducing
dollar dependence?
Can NDB, CBDCs and cross-border payment interoperability
create a credible alternative financial infrastructure?
4. Objectives of the Study
The study has six objectives:
To examine the evolution of BRICS as a financial cooperation
platform.
To measure changes in the dollar's international reserve
position.
To examine the development of local-currency settlement.
To analyse NDB as an alternative source of development
finance.
To assess the potential contribution of CBDCs and
interoperable payment systems.
To evaluate India's strategic position between BRICS and the
Western financial system.
5. Research Questions
RQ1
Has the dollar's share of global
official reserves declined significantly?
RQ2
Has the rise of alternative
currencies translated into a corresponding reduction in dollar dominance in
foreign-exchange markets?
RQ3
Can local-currency settlement
substantially bypass dollar intermediation?
RQ4
Can NDB become an alternative to the
IMF?
RQ5
Can BRICS payment interoperability
and CBDCs materially accelerate de-dollarization?
RQ6
Is India's strategy better described
as de-dollarization or financial diversification?
6. Hypotheses
H01
There is no significant downward
trend in the US dollar's share of global official foreign-exchange reserves.
H1
There is a significant downward
trend in the US dollar's share of global official foreign-exchange reserves.
H02
The expansion of alternative
currencies has no significant relationship with the declining dollar share of
global reserves.
H2
The increasing role of alternative
currencies is significantly associated with the declining dollar share.
H03
BRICS financial initiatives have not
yet produced a statistically or institutionally meaningful displacement of
dollar dominance in global FX markets.
H3
BRICS financial initiatives have
produced measurable diversification, but not displacement, of dollar dominance.
7. Conceptual Framework
The study proposes the following
framework:
BRICS Expansion
↓
Greater Economic Weight
↓
Local-Currency Trade
↓
Alternative Payment Systems
↓
CBDC Interoperability
↓
NDB Local-Currency Finance
↓
Reserve Diversification
↓
Financial
Optionality
rather than
Immediate
Dollar Replacement
This distinction represents the central
argument of this research.
8. Major Instruments of BRICS De-Dollarization
8.1
Local-Currency Settlement
The simplest form of
de-dollarization is bilateral trade settlement in national currencies.
Examples include:
rupee–ruble transactions
yuan–renminbi settlement
yuan–real transactions
rupee–dirham arrangements
local-currency commodity transactions.
However, bilateral settlement does
not necessarily eliminate the dollar from the financial system.
It may simply reduce the number
of transactions requiring dollar intermediation.
9. India–Russia Case
The India–Russia relationship
provides an important case study.
Following the sharp expansion of
Russian oil imports by India, both countries explored mechanisms to facilitate
rupee–ruble trade.
In 2023/24, bilateral India–Russia
trade reached approximately $61.43 billion, while India's exports to
Russia were only around $4.3 billion, producing a substantial trade imbalance.
This imbalance illustrates one of the central problems of local-currency settlement:
accumulating one country's currency does not automatically create balanced
bilateral trade.
Therefore:
Local currency + trade imbalance =
settlement problem
unless the accumulated currency can
be:
invested,
converted,
used for imports,
transferred,
or exchanged through a liquid foreign-exchange market.
10. BRICS Payment Infrastructure
BRICS has moved beyond simply
discussing national currencies.
The 2025 Rio de Janeiro Declaration
welcomed progress on the BRICS Cross-Border Payments Initiative and the
work of the BRICS Payment Task Force. The stated objectives include faster,
cheaper, more accessible, transparent and secure cross-border payments.
Importantly, the initiative is based
on interoperability, rather than necessarily creating a single BRICS
currency.
This distinction is especially
important for India.
11. September 2026: The India Moment
September 2026 represents an
important turning point.
India is chairing BRICS in 2026,
with the BRICS summit scheduled for New Delhi on September 12–13, 2026.
India is advocating integration or interoperability of CBDCs among BRICS
countries to improve cross-border payments.
This proposal represents a
significant evolution:
Stage 1: Local currencies
↓
Stage 2: Local payment systems
↓
Stage 3: Interoperability
↓
Stage 4: CBDC interoperability
↓
Stage 5: Potentially integrated cross-border settlement architecture
But India has simultaneously
maintained a pragmatic position: the purpose is to facilitate transactions
rather than establish an anti-dollar monetary bloc.
12. The New Development Bank
The New Development Bank represents
the institutional financial pillar of BRICS.
NDB was created to finance
infrastructure and sustainable development.
By the end of 2025, NDB reported:
|
Indicator |
Position |
|
Total financing approved |
$42.9 billion |
|
Projects approved |
139 |
|
Projects in portfolio at end-2025 |
115 |
|
2025 financing approvals |
$3.171 billion |
|
Portfolio financing at end-2025 |
$35.593 billion |
These figures demonstrate that NDB
is no longer merely a political proposal. It is an operating
development-finance institution.
13. Can NDB Replace the IMF?
Short
answer: No—not at present.
The institutions perform different
functions.
|
Dimension |
NDB |
IMF |
|
Main purpose |
Development finance |
Macroeconomic/financial stability |
|
Infrastructure |
Strong |
Limited |
|
Crisis lending |
Limited |
Core function |
|
Conditionality |
Generally less intrusive |
Often substantial |
|
Currency reach |
BRICS/emerging markets |
Global |
|
Emergency balance-of-payments
support |
Limited |
Major function |
|
Scale |
Much smaller |
Much larger |
|
Political model |
Emerging-market institution |
Global multilateral institution |
Therefore, NDB should be regarded as
an alternative development-finance channel, not an IMF replacement.
14. The Dollar Reality Check
The strongest counterargument to the
de-dollarization thesis comes from the global foreign-exchange market.
According to the BIS 2025 Triennial
Survey, the dollar was on one side of 89.2% of all FX transactions in
April 2025, up from 88.4% in 2022. The renminbi increased to 8.5%.
This produces a striking
contradiction:
BRICS financial diversification is
increasing while dollar FX dominance remains extremely high.
Thus, de-dollarization should not be
interpreted as synonymous with dollar disappearance.
15. Statistical Analysis I: Dollar Reserve Trend
The following annual series is based
on IMF COFER data as reproduced in the Federal Reserve's 2025 review.
|
Year |
USD
share of global reserves (%) |
|
2015 |
65.8 |
|
2016 |
65.4 |
|
2017 |
62.7 |
|
2018 |
61.8 |
|
2019 |
60.8 |
|
2020 |
58.9 |
|
2021 |
58.8 |
|
2022 |
58.4 |
|
2023 |
58.4 |
|
2024 |
57.8 |
Trend
equation
USD Reserve Share = 1926.03 − 0.9297
× Year
Statistical
results
|
Test |
Result |
|
Pearson correlation (Year–USD
share) |
−0.951 |
|
R² |
0.905 |
|
Regression slope |
−0.930 percentage points/year |
|
p-value |
0.000024 |
|
Significance |
Highly significant |
Interpretation
The evidence strongly rejects H01.
There was a statistically
significant downward trend in the dollar's share of global official reserves
over 2015–2024.
However, statistical decline does
not establish BRICS causality.
Other factors include:
euro movements,
gold accumulation,
exchange-rate valuation effects,
reserve diversification,
geopolitical risk,
monetary policy,
central-bank portfolio management.
The IMF's latest available 2026Q1
data show the dollar at 57.13% of global foreign-exchange reserves,
illustrating that dollar dominance remains substantial.
16. Statistical Analysis II: Pre- and Post-2020
Comparison
For analytical purposes, the period
is divided into:
2015–2019
versus
2020–2024
|
Period |
Mean
USD reserve share |
|
2015–2019 |
63.30% |
|
2020–2024 |
58.46% |
|
Difference |
−4.84 percentage points |
An independent-samples t-test gives:
|
Statistic |
Result |
|
t |
4.807 |
|
df |
8 |
|
p-value |
0.00134 |
The difference is statistically
significant at the 1% level.
Important
qualification
This test demonstrates a period
difference, not that BRICS caused the decline.
It is therefore more scientifically
accurate to say:
The dollar's reserve share declined
significantly during the period in which BRICS financial diversification also
accelerated, but the statistical evidence alone cannot establish a causal BRICS
effect.
17. Statistical Analysis III: Dollar–Renminbi
Relationship
The Federal Reserve's IMF-based
series shows the renminbi's reserve share increasing after its inclusion in
COFER, while the dollar's share declined.
For 2015–2024, the calculated
Pearson correlation between the dollar and renminbi reserve shares is:
r
= −0.914
with:
p
≈ 0.00021
This is a strong negative
association.
But again, the finding must not be
interpreted as:
“Every 1% lost by the dollar goes to
China.”
The global reserve system includes
euro, yen, sterling, Australian dollar, Canadian dollar, Swiss franc, gold and
other assets.
The correct interpretation is:
The rise of non-dollar reserve
currencies is associated with a more diversified reserve structure.
18. Statistical Analysis IV: FX Market Reality
|
Indicator |
2022 |
2025 |
|
Dollar share of FX transactions |
88.4% |
89.2% |
|
RMB share |
7.0% |
8.5% |
|
Global FX turnover |
$7.5 tn/day |
$9.6 tn/day |
The result is extremely important.
The dollar's reserve share has
declined, but its FX transaction share has not declined.
Instead:
Dollar reserve share ↓
while
Dollar FX transaction share →
remains extremely high
and
RMB FX share ↑
This suggests diversification
without displacement.
19. Statistical Interpretation of the Four Indicators
|
Indicator |
Evidence |
Research
interpretation |
|
USD reserve share |
Declining |
De-dollarization is visible |
|
RMB reserve share |
Increasing |
Alternative currency gaining space |
|
USD FX share |
89.2% |
Dollar remains dominant |
|
NDB financing |
$42.9bn |
Alternative development finance exists |
|
BRICS payments |
Interoperability work underway |
Infrastructure emerging |
|
CBDC integration |
India pushing proposal in 2026 |
Potential future accelerator |
Therefore:
BRICS
has succeeded more in creating alternatives than in replacing the dollar.
20. Comparative Country Analysis
|
Country |
Strategy |
Major
Advantage |
Major
Constraint |
|
China |
RMB internationalization |
Huge trade network |
Capital controls |
|
India |
Multi-alignment/local settlement |
Strategic autonomy |
Trade imbalance and convertibility
constraints |
|
Russia |
Alternative settlement
infrastructure |
Experience under sanctions |
Limited financial-market depth |
|
Brazil |
Diversification |
Large commodity economy |
Dollar-linked trade |
|
South Africa |
Regional/local settlement |
African financial connectivity |
Smaller capital market |
|
UAE |
Currency/payment diversification |
Financial hub |
Strong dollar linkage |
|
Saudi Arabia |
Selective diversification |
Energy power |
Dollar-centred oil architecture |
|
Iran |
Non-dollar settlement |
Sanctions experience |
Financial isolation |
21. India: The Tightrope Strategy
India occupies a unique position.
It is simultaneously:
a BRICS member,
a major participant in Western financial markets,
a strategic partner of the United States,
an important global services exporter,
a major importer of energy,
and an advocate of Global South reform.
India therefore has little incentive
to replace one dependency with another.
Its preferred strategy is better
described as:
“Diversify
without decoupling.”
India can use:
BRICS + Western institutions +
domestic digital infrastructure + local currencies
rather than choosing:
BRICS OR the West.
22. Why a Common BRICS Currency Is Difficult
A common currency would require much
deeper institutional integration.
The major obstacles include:
Different monetary-policy regimes.
Different inflation rates.
Capital controls.
Different exchange-rate systems.
Trade imbalances.
Unequal economic structures.
Political tensions.
Lack of a common central bank.
Lack of a common fiscal authority.
Limited willingness to surrender monetary sovereignty.
Therefore, a common BRICS
currency remains substantially more difficult than interoperable payment
systems.
23. CBDCs: The Potential Game Changer
CBDCs could alter the economics of
cross-border settlement.
A conventional transaction may involve:
Importer → commercial bank →
correspondent bank → dollar clearing → exporter
A compatible CBDC architecture could
potentially enable:
Importer CBDC → interoperable
platform → exporter CBDC
This could reduce:
settlement time,
intermediary costs,
foreign-exchange conversion steps,
correspondent banking dependence.
India's September 2026 proposal to
connect BRICS CBDCs therefore represents an important technological
development.
However, technology cannot solve
political and economic problems such as:
exchange-rate risk,
trade imbalance,
capital controls,
sanctions,
currency liquidity,
data governance,
cybersecurity.
24. BRICS De-Dollarization Dashboard
|
Dimension |
Current
Status |
Potential |
|
Local currencies |
Active but bilateral |
High |
|
NDB local-currency finance |
Expanding |
High |
|
Cross-border payments |
Under development |
High |
|
CBDC interoperability |
2026 priority |
Very high |
|
Common BRICS currency |
Not established |
Low–medium |
|
Reserve diversification |
Clearly occurring |
High |
|
Dollar replacement |
Not occurring |
Low |
|
Financial optionality |
Increasing |
Very high |
25. Major Finding: The “Three-Speed” BRICS Model
The evidence suggests that BRICS
de-dollarization is occurring at three different speeds.
Speed
1 — Fast
Payment innovation
UPI-type systems
CBDCs
digital settlement
payment interoperability
Speed
2 — Medium
Local-currency trade
rupee
yuan
ruble
dirham
real
Speed
3 — Slow
Reserve-currency replacement
The dollar's deep financial markets,
liquidity and network effects remain difficult to reproduce.
26. NDB Versus IMF: Capacity Test
The evidence does not support the
proposition that NDB can currently replace IMF.
Instead:
NDB's
comparative advantage
Infrastructure + sustainability +
emerging-market financing
IMF's
comparative advantage
Balance-of-payments support +
macroeconomic surveillance + global crisis response
Consequently:
NDB is better understood as a
complementary pillar of a multipolar financial architecture rather than an
institutional substitute for the IMF.
27. Major Constraints on BRICS De-Dollarization
27.1
Dollar Network Effects
The dollar is widely used because
everyone else uses it.
27.2
Financial Market Depth
US Treasury markets remain
exceptionally deep and liquid.
27.3
Currency Convertibility
The yuan remains subject to capital
controls.
27.4
Trade Imbalances
India–Russia demonstrates how
local-currency settlement can create accumulated currency balances.
27.5
Political Divergence
India and China have strategic
competition.
Iran and Saudi Arabia/UAE have
different geopolitical interests.
Russia and China have different
economic priorities.
27.6
Lack of Central Authority
BRICS does not have a common central
bank or fiscal authority.
28. September 2026 Strategic Update
The September 2026 environment is
particularly revealing.
India's CBDC-interoperability
proposal demonstrates that the debate is moving from:
“Should
BRICS abandon the dollar?”
toward:
“Can
BRICS reduce the number of transactions that require the dollar?”
That is a much more realistic
proposition.
At the same time, Russia has
recently stated that it does not seek “de-dollarisation” as an objective and is
open to different payment methods, illustrating the divergence within BRICS
itself.
This strengthens the argument that
BRICS is not a unified anti-dollar bloc.
29. Discussion
The statistical evidence produces an
interesting paradox.
Evidence
supporting de-dollarization
Dollar reserve share has declined.
Alternative reserve currencies have expanded.
Local-currency settlement is increasing.
NDB provides non-Western development finance.
BRICS is developing cross-border payment architecture.
CBDC interoperability is becoming a policy priority.
Evidence
against rapid dollar displacement
Dollar FX share remains around 89%.
Dollar liquidity remains unmatched.
NDB is far smaller than the IMF.
BRICS has no common currency.
Members have different strategic interests.
Local-currency trade faces liquidity and trade-balance
problems.
Therefore, the appropriate
conclusion is:
BRICS
is reducing dependence, not eliminating dependence.
30. Key Findings
Finding
1
The dollar's reserve share has
experienced a statistically significant long-term decline.
Finding
2
The renminbi and other currencies
have increased their presence, creating greater reserve diversification.
Finding
3
Dollar dominance in foreign-exchange
markets remains extraordinarily strong.
Finding
4
NDB has become a credible
development-finance institution but is not an IMF substitute.
Finding
5
Local-currency settlement is more
feasible bilaterally than multilaterally.
Finding
6
CBDC interoperability could become
the most technologically significant component of BRICS financial cooperation.
Finding
7
India's strategy is fundamentally
different from an aggressive anti-dollar strategy.
Finding
8
BRICS' greatest achievement may be option
creation rather than dollar replacement.
31. Conclusion
The evidence does not support the
dramatic claim that BRICS is about to destroy the dollar-based international
monetary system.
Nor does the evidence support the
opposite claim that BRICS de-dollarization is meaningless.
The reality lies between these
extremes.
BRICS is constructing a parallel
layer of financial infrastructure.
Its components include:
Local currencies
NDB
Cross-border payments
CBDCs
Reserve diversification
Alternative financial institutions
=
A
More Plural Global Financial System
The September 2026 Indian initiative
is particularly important because it shifts the discussion from ideological
de-dollarization toward practical payment interoperability.
The ultimate outcome may therefore
not be:
Dollar
vs BRICS
but:
Dollar
+ Euro + Yuan + Rupee + Other Currencies + Interoperable Digital Payment
Systems
In this scenario, the dollar could
remain the dominant global currency while becoming less indispensable.
That distinction captures the real
economic significance of BRICS.
32. Final Statistical Decision on Hypotheses
|
Hypothesis |
Statistical/Empirical
Result |
Decision |
|
H01: No downward USD reserve trend |
Regression p = 0.000024 |
Rejected |
|
H1: Significant downward USD
reserve trend |
Supported |
Accepted |
|
H02: No relationship between
diversification and USD decline |
r = −0.914; p ≈ 0.00021 |
Rejected |
|
H2: Significant association |
Supported |
Accepted, with causality caveat |
|
H03: No meaningful displacement of
dollar FX dominance |
Dollar = 89.2% in 2025 |
Supported |
|
H3: Diversification without
displacement |
Strongly supported |
Accepted |
33. Researcher's Core Proposition
BRICS is not building a world
without the dollar. It is building a world in which the dollar is no longer the
only practical financial route.
This is the most defensible
interpretation of the evidence available in September 2026.
34. Limitations of the Study
This research relies predominantly
on secondary international datasets and official institutional documents.
The statistical analysis
demonstrates association and trends rather than proving that BRICS itself caused
the decline in the dollar's reserve share.
In addition, bilateral
local-currency settlement data are not uniformly reported across BRICS members,
making a comprehensive panel-data estimate of “dollar bypass” difficult.
The September 2026 CBDC initiative
is also at a developmental stage; its eventual economic impact cannot yet be
measured with post-implementation data.
35. Future Research Model
A larger empirical study could
construct a BRICS De-Dollarization Index (BDI) incorporating:
|
Variable |
Weight |
|
Local-currency trade |
25% |
|
Non-dollar reserves |
20% |
|
CBDC interoperability |
15% |
|
Alternative payment infrastructure |
15% |
|
NDB local-currency lending |
15% |
|
Non-dollar commodity settlement |
10% |
The resulting index could be
calculated annually for 2015–2030 and compared with:
USD reserve share,
USD FX share,
intra-BRICS trade,
NDB financing,
exchange-rate volatility,
CBDC transaction volume.
This would provide a stronger
quantitative test of whether BRICS is merely diversifying or actually
transforming the international monetary system.
References
Bank for International Settlements.
(2022). Triennial Central Bank Survey of foreign exchange and
over-the-counter derivatives markets.
Bank for International Settlements.
(2025). Triennial Central Bank Survey: OTC foreign exchange turnover in
April 2025.
BRICS Brasil. (2025). About the
BRICS.
BRICS Brasil. (2025). BRICS Data.
BRICS Brasil. (2025). Rio de
Janeiro Declaration.
BRICS Brasil. (2025). BRICS
Finance Ministers and Central Bank Governors Joint Statement.
Federal Reserve Board. (2025). The
International Role of the U.S. Dollar—2025 Edition.
International Monetary Fund. (2026).
Currency Composition of Official Foreign Exchange Reserves (COFER).
International Monetary Fund. (2026).
World Official Foreign Currency Reserves Largely Unchanged in the First
Quarter of 2026.
New Development Bank. (2025). Annual
Report 2025.
New Development Bank. (2026). Projects
and institutional statistics.
Reuters. (2026, September 10). India
to push BRICS digital currency link despite hurdles.
Reuters. (2026, September 8). Russia
does not seek “de-dollarisation”, open to payment methods.
APPENDIX I
BRICS
De-Dollarization Dashboard, 2025–26 and Measurement of India’s September 2026
Financial Proposals
Actual
Progress, Proposed MOUs and Potential Economic Impact
Data cut-off: 10 September 2026
A.
BRICS Financial De-Dollarization: 2025–26 Updated Dashboard
|
Indicator |
2024 |
2025 |
2026
position/status |
Direction |
|
BRICS members |
10/11 transition |
11 |
11 |
↑ |
|
BRICS share of world GDP, PPP |
~37% |
~38% |
~37%–39% |
↑ |
|
USD share of global reserves |
~57.8% |
~56–57% |
57.13% in Q1 2026 |
↓ |
|
USD share of global FX
transactions |
88.5% |
89.2% |
Latest available BIS benchmark |
→/↑ |
|
RMB share of global FX
transactions |
~7% |
8.5% |
Latest BIS benchmark |
↑ |
|
NDB cumulative approved financing |
~35bn |
$42.9bn by end-2025 |
Continuing |
↑ |
|
Local-currency settlement |
Pilot/bilateral |
Expanding |
Core policy priority |
↑ |
|
BRICS cross-border payments |
Framework |
Framework development |
Interoperability priority |
↑ |
|
CBDC cooperation |
Experimental |
Policy discussion |
India pushing linkage in Sept.
2026 |
↑↑ |
|
Common BRICS currency |
No |
No |
No established common currency |
— |
|
BRICS CBDC MOU |
No confirmed binding agreement |
— |
Proposal/negotiation stage as of
Sept. 10 |
Pending |
The important finding is that the payment
infrastructure is advancing faster than actual currency substitution. BIS
data show that the dollar remained on one side of 89.2% of FX transactions in
2025, even as the renminbi's share increased to 8.5%.
B. 2025–26 Statistical Extension
Table
B1. Dollar Reserve Share: Extended Research Series
|
Year |
USD
share of global reserves (%) |
|
2015 |
65.8 |
|
2016 |
65.4 |
|
2017 |
62.7 |
|
2018 |
61.8 |
|
2019 |
60.8 |
|
2020 |
58.9 |
|
2021 |
58.8 |
|
2022 |
58.4 |
|
2023 |
58.4 |
|
2024 |
57.8 |
|
2025 |
~56–57 |
|
2026 Q1 |
57.13 |
Interpretation
The additional 2025–26 observations
do not support the claim of a sudden collapse of the dollar.
Instead, the evidence indicates:
Gradual reserve diversification
combined with continued dollar dominance.
The IMF's Q1 2026 figure of 57.13%
is particularly important because it shows that the dollar remains the world's
largest reserve currency despite continuing diversification.
C. 2025 BIS Foreign-Exchange Test
The latest comprehensive BIS
benchmark gives:
|
Currency |
Share
of global FX transactions, April 2025 |
|
US Dollar |
89.2% |
|
Euro |
~28.9% |
|
Japanese Yen |
~16.8% |
|
British Pound |
~10.2% |
|
Chinese Renminbi |
8.5% |
Shares exceed 100% because every FX
transaction contains two currencies.
Research
finding
The dollar's reserve share has
declined substantially over the decade, but its FX-market role remains
extremely strong.
Therefore:
Reserve
de-dollarization ≠ transaction de-dollarization
This distinction should be
highlighted in your paper.
D. 2025–26 NDB Measurement
Table
D1. New Development Bank as an Alternative Financial Institution
|
Indicator |
Position
by end-2025/2026 |
|
Financing approved since inception |
$42.9 billion |
|
Projects approved |
139 |
|
Projects in portfolio |
115 |
|
2025 approvals |
$3.171 billion |
|
Portfolio financing |
$35.593 billion |
|
Main sectors |
Infrastructure, sustainability,
development |
|
Strategic significance |
Alternative development finance |
NDB
De-Dollarization Score
I recommend introducing a NDB
De-Dollarization Support Score (NDSS):
|
Dimension |
Weight |
Score
/10 |
|
Local-currency financing |
25% |
7 |
|
Alternative development finance |
25% |
8 |
|
Geographic diversification |
15% |
7 |
|
Dollar-risk reduction |
15% |
6 |
|
Institutional independence |
10% |
8 |
|
Crisis-finance capacity |
10% |
4 |
|
Weighted score |
100% |
6.8/10 |
Interpretation
NDB = 6.8/10
This means NDB has meaningful
potential as an alternative development-finance institution, but not
sufficient scale to replace the IMF.
E. India September 2026: CBDC Proposal
This is the most important new
section for your research paper.
According to reporting on September
10, 2026, India is advocating integration/interoperability of BRICS
central-bank digital currencies to improve cross-border payments ahead of
the September 12–13 New Delhi summit. The proposal is explicitly presented as a
mechanism to make international transactions faster and easier rather than as
an attempt to replace the US dollar.
Proposed
architecture
India CBDC
↓
China CBDC
↓
Russia CBDC
↓
Brazil CBDC
↓
South Africa CBDC
↓
Expanded BRICS members
↓
Interoperable
BRICS Digital Settlement Network
F. Proposed September 2026 MOU: Measurement Framework
Because the summit has not yet
concluded as of September 10, the following should be labelled in your
paper as a proposed/expected MOU framework, not as an already signed
agreement.
|
Proposed
MOU component |
Importance |
Potential
impact |
Status
as of Sept. 10 |
|
CBDC interoperability |
Very high |
Very high |
India proposal |
|
Local-currency settlement |
Very high |
High |
Existing cooperation |
|
Cross-border payment
interoperability |
Very high |
Very high |
Existing BRICS work |
|
Currency-swap mechanism |
High |
High |
Needed/under discussion |
|
Common payment messaging |
High |
High |
Development stage |
|
Digital trade settlement |
High |
High |
Potential |
|
Common BRICS currency |
Low |
Very high if implemented |
Not established |
|
NDB local-currency financing |
High |
High |
Existing direction |
|
BRICS payment standards |
High |
Very high |
Potential |
|
Common FX liquidity pool |
High |
Very high |
Potential |
G. Proposed BRICS Financial MOU: Quantitative Scoring
A useful research tool is a BRICS
Financial Integration Potential Index (BFIPI).
Formula
BFIPI = Σ (Weight × Implementation
Score)
where:
0 = no implementation
1 = discussion
2 = political agreement
3 = formal MOU/framework
4 = pilot implementation
5 = operational system
Table
G1. Proposed September 2026 MOU Score
|
Proposed
area |
Weight |
Current
score |
Weighted
score |
|
CBDC interoperability |
25 |
2 |
10.0 |
|
Local-currency settlement |
20 |
3 |
12.0 |
|
Cross-border payments |
15 |
3 |
9.0 |
|
Currency swaps |
10 |
1 |
2.0 |
|
Digital trade settlement |
10 |
2 |
4.0 |
|
Payment messaging |
10 |
2 |
4.0 |
|
NDB local-currency finance |
5 |
3 |
3.0 |
|
Common currency |
5 |
0 |
0 |
|
Total |
100 |
— |
44/100 |
Result:
BRICS Financial Integration Potential = 44/100
This should be interpreted as:
Emerging
but not yet integrated
The most advanced components are local-currency
settlement and cross-border payment cooperation, while CBDC
interoperability has potentially high future importance but remains at the
proposal/development stage as of September 10.
H. Potential Economic Impact of a Successful September
MOU
The following is a scenario
analysis, not an actual forecast.
|
Impact
variable |
Low
scenario |
Medium
scenario |
High
scenario |
|
BRICS transactions using local
currencies |
+5% |
+15% |
+25% |
|
Reduction in dollar intermediation |
3% |
10% |
20% |
|
Cross-border settlement cost
reduction |
5% |
15% |
30% |
|
Settlement time reduction |
20% |
40% |
70% |
|
CBDC-linked transactions |
Pilot |
Moderate |
Large |
|
NDB local-currency financing |
+10% |
+25% |
+40% |
|
Overall de-dollarization impact |
Low |
Moderate |
High |
Most
realistic scenario
For the next 3–5 years, the medium
scenario appears more realistic than the high scenario.
Therefore, a successful MOU could
produce:
meaningful reduction in transaction
dependence on the dollar without eliminating dollar dominance.
I. India-Specific Impact Assessment
India is potentially the biggest
strategic beneficiary because it can combine:
UPI
Digital Rupee
Local-currency settlement
BRICS payment interoperability
NDB financing
Western financial access
This creates a distinctive model:
India's “Dual-Track Financial Strategy”
Track
1 — Western System
US dollar
IMF
World Bank
SWIFT
Western capital markets
G7 trade and investment
Track
2 — BRICS/Alternative System
Rupee settlement
CBDC
UPI interoperability
NDB
BRICS payment mechanisms
Local-currency trade
India therefore does not need
to choose between the two systems.
J. Potential September 2026 MOU: India-Centred
Research Matrix
|
Proposed
commitment |
Benefit
to India |
Risk
to India |
Overall
score |
|
CBDC interoperability |
Very high |
Cybersecurity/data risks |
9/10 |
|
Local-currency settlement |
High |
Currency imbalance |
8/10 |
|
BRICS payment interoperability |
Very high |
China-system dependency |
8/10 |
|
Currency swaps |
High |
Counterparty risk |
7/10 |
|
NDB rupee lending |
High |
Limited scale |
8/10 |
|
Common BRICS currency |
Uncertain |
Loss of monetary autonomy |
3/10 |
|
Common payment standards |
High |
Governance disputes |
8/10 |
|
Digital trade platform |
High |
Technology fragmentation |
8/10 |
K. India September 2026 Strategic Scorecard
|
Strategic
objective |
Score
/10 |
|
Reduce transaction costs |
9 |
|
Reduce dollar dependence |
7 |
|
Preserve strategic autonomy |
9 |
|
Promote rupee internationalisation |
8 |
|
Avoid China-dominated architecture |
6 |
|
Strengthen Global South leadership |
9 |
|
Protect Western financial
relationships |
8 |
|
Create alternative payment
infrastructure |
8 |
|
Replace the dollar |
2 |
|
Create financial optionality |
10 |
Overall
India Strategy Score:
8.0 / 10
L. The Most Important Research Finding
The September 2026 evidence changes
the way the BRICS debate should be framed.
It is not:
BRICS is creating a currency to
defeat the US dollar.
It is:
BRICS is attempting to create
sufficient payment and settlement alternatives so that individual countries can
choose when they need the dollar and when they do not.
This is precisely why the Indian
CBDC initiative is potentially more important than the recurring discussion
about a common BRICS currency. India is emphasizing interoperability and
payment efficiency rather than a single currency.
M. Proposed Empirical Test for the Final Paper
For your final empirical research
paper, I recommend testing:
Model
1 — Dollar Reserve Dependency
USD Reserve Share = β0 + β1(BRICS
Economic Weight) + β2(Alternative Currency Share) + β3(Gold Share) + ε
Model
2 — Dollar Transaction Dependency
USD FX Share = β0 + β1(Local
Currency Settlement) + β2(RMB Share) + β3(CBDC Development) + ε
Model
3 — India
Dollar Transaction Dependence = β0 +
β1(Rupee Settlement) + β2(UPI/CBDC Development) + β3(BRICS Payment Integration)
+ ε
Recommended tests:
Pearson correlation
Multiple regression
ANOVA
t-test
VIF/multicollinearity
Durbin-Watson
R² and adjusted R²
coefficient significance
effect size
N. Appendix Conclusion
2025–26
evidence produces a three-part conclusion:
1. De-dollarization is measurable.
The dollar's reserve share has
declined and alternative currencies have expanded.
2. Dollar dominance has not
disappeared.
The dollar remained on one side of
approximately 89.2% of global FX transactions in 2025.
3. September 2026 could be a
technological rather than monetary turning point.
India's push for BRICS CBDC
interoperability could make payment architecture more important than the
creation of a common BRICS currency
