Dollar Dominance Is Not Dying. But the BRICS Currency Threat Is More Real Than Wall Street Admits

Two days prior to the G20 summit in Johannesburg, on a November morning in Pretoria, something occurred that was hardly covered by American financial media. Standard Bank, the biggest bank in Africa in terms of assets, became the first organization on the continent to link directly into China’s Cross-Border Interbank Payment System in a low-key ceremony at the South African Reserve Bank. No money is needed. No SWIFT. Rather than using the intermediary currency that has dominated international trade since the end of World War II, African companies could now settle transactions with Chinese counterparts directly in renminbi. On the surface, it was an unglamorous bureaucratic event. However, it was just another tiny brick taken out of the wall in the larger tale of dollar erosion.

Wall Street and many Western economists have an inclination to write off BRICS currency aspirations as noise, the typical geopolitical grandstanding from economies lacking the institutional depth to support their rhetoric. On a limited technical reading, that dismissal makes sense and isn’t wholly incorrect. Approximately 89% of all international foreign exchange transactions still involve the US dollar. Less than 10% of international trade settlements are handled by the Chinese renminbi. The deep bond market, legal framework, and liquidity that the dollar’s global role requires are currently unavailable in any competing currency. That is all undeniable. However, the dismissal has begun to feel as though it is ignoring something important, and the data is mounting in ways that are more difficult to ignore every year.

The dollar now makes up about 58% of world reserves, down from 72% in 1999. That isn’t a cliff; rather, it’s a 25-year-long slope that doesn’t appear to be going back. For the third year in a row, central banks around the world increased their gold reserves by more than 1,000 metric tons in 2024. Because they are at ease, nations do not hoard gold at that rate. They act in this way as a covert hedge against something. A similar message is conveyed by the price signal from gold markets, which are currently at all-time highs: institutional trust in the dollar as a stable reserve asset is eroding.

No BRICS summit was the event that most likely caused the most long-term harm to the dollar’s reputation. Following the invasion of Ukraine in 2022, Russia froze its foreign exchange reserves, sending a clear message to all non-Western central banks worldwide. Reserves denominated in dollars could be used as weapons. Through sanctions on Iran and other countries, the US had previously used financial access as a coercive tool, but the scope of the Russia action was different. Sovereign assets worth more than $300 billion were frozen. The practical implication for governments in Beijing, Riyadh, New Delhi, and elsewhere was inevitable, regardless of one’s opinion of the policy rationale: holding dollars was no longer solely an economic choice. It was an exposure to geopolitics.

The headline writers frequently misunderstand what BRICS is creating in response—a single rival currency. The infrastructure for escape is diverse. The goal of BRICS Pay, the decentralized payment messaging system that was discussed at the Kazan summit in 2024, is to enable member countries to conduct local currency transactions without using SWIFT. Central banks in China, Hong Kong, Thailand, and the United Arab Emirates can now settle payments using digital national currencies thanks to Project mBridge, which was created in collaboration with the Bank for International Settlements. Instead of using the Western-dominated SWIFT system, more than half of China’s trade now passes through its own cross-border settlement network, CIPS. Over 90% of bilateral trade between Russia and India is now conducted in non-dollar currencies, primarily rubles and rupees. Brazil uses yuan and reais to settle soybean sales to China. These are not experimental initiatives. They are practical realities.

There are significant challenges, and it’s still unclear if any of these systems can grow into true worldwide substitutes. Two nations with little bilateral trade would need to maintain sizable reserves of each other’s currencies in order to avoid the dollar, which is a practical and logistical obstacle that prevents widespread adoption. China’s aspirations are still fundamentally hampered by the renminbi’s limited convertibility. The proposed Genius Act framework for dollar-denominated stablecoins is, at least in part, an attempt to increase the dollar’s influence in digital finance before non-dollar alternatives can gain traction, demonstrating that the US is not a passive player in all of this.

As these actions mount, there’s a sense that the discussion has been too limited to the question of whether the dollar will be “replaced.” The real trajectory is missed by that framing. No one in Mumbai, Pretoria, or Brasília anticipates the yuan becoming the global reserve currency by 2035. They are creating a system in which the dollar is not the only option available for cross-border trade, but rather one of several. Although that scenario differs greatly from the dollar collapse, it nevertheless signifies a significant change in US economic leverage, borrowing costs, and geopolitical reach.

Another layer of pressure is added by the US fiscal picture, which domestic analysts often underestimate. These figures are concrete: a projected $1.9 trillion deficit in 2025, a current account deficit of about 6% of GDP, and a total national debt of more than $38 trillion. They represent the balance sheet of a nation that has been taking out loans against its reserve currency status for many years. Because of this privilege, the US has historically been able to finance deficits at a lower cost than any other country. That premium is predicated on the world’s continued desire for dollars. The math becomes more difficult as the desire gradually wanes.

The dollar is not going extinct. That much is simple. However, the threat posed by the BRICS currency is also not theater, and treating it as such seems more and more like a convenient narrative that favors some interests over the facts. A gradual reorganization of the global financial plumbing, pipe by pipe, that will take decades to fully understand, is what’s actually happening. It’s slower, more structural, and in some ways more consequential than a sudden collapse.