Dedollarization Trend: BRICS and Beyond

01What Dedollarization Actually Means

Dedollarization is not a single switch. It refers to efforts by governments, firms and market participants to reduce the use of the U.S. dollar across four distinct channels: reserves (what central banks hold), trade invoicing (what currency commodities and goods are priced in), settlement (the currency used to actually pay), and cross-border finance (the currency in which loans, bonds and payments rails denominate). Progress is uneven across these channels, and conflating them is the most common error in the debate.

A country can settle a bilateral trade in rubles and yuan while still invoicing oil in dollars. A central bank can trim its dollar holdings while its private banks remain wired into SWIFT. Motivations are diverse — gaining economic independence, reducing exposure to U.S. monetary policy and sanctions, lowering transaction costs, and building local market infrastructure. None of these require the dollar to collapse; they require it to matter less at the margins.

02The BRICS Roster and Why It Grew

BRICS began as a Goldman Sachs shorthand for emerging markets — Brazil, Russia, India, China — later joined by South Africa. Today it is an intergovernmental organization of ten members: the original five plus Egypt, Ethiopia, Iran, the United Arab Emirates and Indonesia. The expansion roughly doubled the bloc's share of global GDP and population and brought in major energy producers, trade chokepoints and dollar-reliant economies.

The expansion matters because it changes what BRICS is. It is no longer a talk shop for rising powers; it now includes U.S.-sanctioned states (Russia, Iran), dollar-pegged Gulf economies (UAE), and the world's most populous Muslim-majority democracy (Indonesia). That breadth is exactly what makes coordinated dedollarization both more plausible and more fractious — the members' interests diverge as widely as their economies.

03Reserves: The Dollar's Slow Bleed

The clearest dedollarization signal is in central bank reserves. The dollar's share of allocated global foreign exchange reserves has fallen from roughly 71 percent in 2000 to about 58 percent today, per reported IMF COFER data. That is a 13-point decline over a quarter century — persistent, but not a rout. The euro sits near 20 percent, the yen and sterling each around 5–6 percent, and the Chinese yuan only about 2–3 percent despite a decade of internationalization push.

The decline is real but often misread. Most of the lost share did not migrate to the yuan; it moved to non-traditional reserve currencies — the Canadian and Australian dollars, the Korean won, and gold. Central banks have diversified away from the dollar more than they have converged to any single alternative. That is the defining feature of the current era: fragmentation, not replacement.

04Trade Settlement: Where the Real Action Is

Reserves move slowly because central banks are conservative; trade settlement moves fast because it responds to sanctions and price incentives. The starkest case is the China-Russia corridor. Before 2022, roughly a quarter of bilateral trade settled in non-dollar currencies. After the Western sanctions cut Russian banks off from much of the dollar payments system, that share surged to an estimated roughly 90 percent by 2024 — settled in yuan, ruble, or via bilateral clearing.

That is dedollarization by force, not choice, and it reveals both the power and the limits of the trend. Inside a sanctioned bilateral corridor, substitution is near-total. But that corridor is a small slice of global trade. Globally, the dollar still invoices the majority of commodity trade and roughly half of global trade invoices are dollar-denominated. The yuan's share of SWIFT payments sits near 5 percent — up, but nowhere near parity.

05Payments Infrastructure: mBridge and the CBDC Question

The most consequential dedollarization work is happening underneath the settlement layer, in payments infrastructure. mBridge is a multi-central-bank digital currency platform developed to support real-time, peer-to-peer cross-border payments using CBDCs on a shared blockchain ledger. The founding central banks include the People's Bank of China, the Hong Kong Monetary Authority, and the central banks of Thailand and the UAE, with the Bank for International Settlements involved in early phases.

The relevance to dedollarization is structural: mBridge lets participants settle directly in their own CBDCs without routing through correspondent banks or the SWIFT messaging network that underpins dollar clearing. In early 2026 the Reserve Bank of India was reported to have proposed linking the digital currencies of BRICS nations — a step that would, in principle, let BRICS central banks settle cross-border payments without touching the dollar system. The proposal is not a treaty and its operational details are not public; treat it as a reported ambition, not a deployed system. But the direction is clear: the infrastructure that would make dedollarization practical rather than declaratory is being built.

06Gold: The Oldest Dedollarization Hedge

The most underappreciated dedollarization channel is gold. Central banks have been net gold buyers at record or near-record levels since 2022, with annual net purchases repeatedly exceeding a thousand tonnes — levels not seen since the 1960s. The buyers are concentrated in emerging markets: China, Russia, India, Turkey, Poland and the Gulf states. For these banks, gold is the one reserve asset that is simultaneously no one's liability and no one's sanction target.

This is dedollarization that does not announce itself as a currency war. It is central banks rebalancing toward an asset that cannot be frozen, debased by another sovereign, or denied in a clearing system. When gold demand and reserve diversification move together, the signal is that trust in the dollar's long-run durability — not its present utility — is being quietly repriced.

07Limits and Pushback: Why the Dollar Stays

The strongest argument against a dollar collapse is the absence of a successor. The dollar's dominance rests on a network effect: deep, liquid Treasury markets; a long history of rule of law and asset convertibility; and the fact that invoicing in dollars reduces currency-mismatch risk for everyone trading with everyone else. No BRICS currency combines these. The yuan is capital-controlled; the rupee is not yet freely convertible at scale; a composite BRICS currency does not exist and most members do not want one that would cede monetary sovereignty to Beijing.

There is also pushback inside the dollar system. The UAE, a BRICS member, maintains a dollar peg and has deep financial ties to the United States. India's private sector still borrows and hedges heavily in dollars. Indonesia's trade is dollar-invoiced even as its central bank diversifies reserves. Dedollarization at the official level and dollar-dependence at the commercial level can coexist for years — and they do.

08Bottom Line: Trend, Not Threat

The honest reading of the dedollarization trend is that it is real, gradual, and geographically uneven. The dollar is losing share at the margins of reserves and trade settlement, particularly inside sanctioned and bilateral corridors, and central banks are hedging with gold and alternative rails. But the structural advantages that make the dollar the default — market depth, convertibility, network effects — have not eroded at the core. The trajectory is erosion of concentration, not of use.

What would change that calculation is not a BRICS declaration but a functional alternative: a payments rail that settles at scale without dollar correspondent banks, a reserve asset that is liquid in a crisis, and a political settlement that gives members confidence the system cannot be turned off. mBridge and the RBI's reported CBDC linkage proposal gesture at the first; gold gestures at the second. The third remains the hardest, and the one no BRICS communique can supply. Watch the infrastructure, not the rhetoric.