De-dollarisation & BRICS' quest for financial sovereignty

For decades, the U.S. dollar has been the dominant currency in the global financial system, functioning as the primary medium for international trade and the key reserve currency for central banks.

- SHARANPREET KAUR

This dominance has given the United States considerable economic and geopolitical leverage, allowing it to impose financial sanctions and influence international monetary policies.

However, recent geopolitical tensions and global economic shifts have accelerated discussions on reducing dependence on the dollar, a process referred to as "de-dollarization." At the forefront of these discussions are the BRICS nations—Brazil, Russia, India, China, and South Africa. These countries are exploring ways to enhance their financial autonomy by reducing reliance on the U.S. dollar in trade, investments, and monetary reserves.

While a fully integrated BRICS currency remains an ambitious goal, alternative strategies such as local currency settlements, new financial institutions, and independent payment systems are being pursued. This article examines the motivations behind the BRICS nations' de-dollarization efforts, the challenges associated with creating a common currency, and the broader implications of this shift for the global financial landscape.

Why Are BRICS Countries Seeking to Reduce Dollar Dependence?

The drive for de-dollarization among BRICS nations is rooted in both economic pragmatism and geopolitical strategy. The U.S. dollar's dominance gives Washington the power to impose financial restrictions on countries that do not align with its foreign policy objectives. Nations like Russia and China, which have faced increasing economic sanctions from the U.S. and its allies, see dollar dependency as a strategic vulnerability.