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BRICS De-dollarisation Could Ultimately Strengthen China’s Renminbi Influence
BRICS countries are discussing ways to use the United States dollar less in trade.
Supporters believe local currencies or a shared currency could make countries less vulnerable to changes in United States policy.
India is interested because it imports most of its oil, which is priced in dollars.
However, countries do not trade equally with one another.
China sells more to many BRICS members than it buys from them, so those countries could end up owing China.
They might therefore need to hold China’s renminbi instead of dollars.
A shared BRICS currency would be difficult because members would have to give up some control over their own money systems.
Digital currencies could make payments faster, but they would not solve these underlying trade imbalances.
The BRICS de-dollarisation debate concerns trade invoicing, payment settlement, and reserve currencies.
Supporters say local currencies or a BRICS currency could reduce dollar dependence and transaction pressures.
The article argues that imbalanced trade would leave many BRICS members holding renminbi.
A common currency would require monetary-policy surrender, while a currency basket faces liquidity and issuer risks.
Central bank digital currencies could reduce settlement costs but would not resolve local-currency trade imbalances.
- Who
- BRICS members, particularly China, India, and Russia.
- What
- A debate over reducing reliance on the dollar through local currencies, a BRICS currency, or central bank digital currencies.
- Where
- Within the BRICS grouping and its cross-border trade and payment systems.
- When
- As India prepares to host the 18th BRICS summit.
- Why
- To reduce exposure to dollar shortages, United States monetary policy, sanctions risks, and transaction costs.
De-dollarisation proponents
De-dollarisation skeptics
Reducing dollar dependence
De-dollarisation proponents
Local currencies, a BRICS currency, or CBDCs could reduce reliance on dollar reserves, foreign intermediaries, and exposure to United States monetary policy.
De-dollarisation skeptics
Trade imbalances, limited convertibility, and weak liquidity could make alternatives impractical or simply redirect dependence toward the renminbi.
Benefits for India
De-dollarisation proponents
Using alternatives could help India manage vulnerabilities linked to dollar-priced oil, sanctions risks, and capital outflows.
De-dollarisation skeptics
India’s trade deficits with most BRICS members could leave it and other countries accumulating currencies that trading partners do not want to hold.
Central bank digital currencies
De-dollarisation proponents
CBDC bridges could combine payment messaging and final settlement, reducing transaction costs and reliance on intermediaries.
De-dollarisation skeptics
Digital local-currency payments would not fix the underlying difficulty of converting accumulated currencies or settling persistent trade imbalances.
Key facts
- India’s oil import dependence
- India meets 88% of its crude-oil needs through imports.
- Oil’s share of imports
- Oil accounts for about one-fifth of India’s total imports.
- India’s BRICS trade deficit
- India’s cumulative trade deficit with BRICS countries in FY26 was reported at US$226 billion.
- Russia-China local-currency trade
- Almost 99% of bilateral trade was conducted in local currencies, according to the article.
- Common-currency option
- A circulating BRICS currency would require a supranational banking authority and could limit members’ monetary sovereignty.
- Currency-basket option
- A basket could face problems involving liquidity, convertibility, reserve backing, and the absence of an issuer of last resort.
- CBDC proposal
- India is reportedly pushing central bank digital currency as a summit agenda item to reduce payment-settlement costs.
Sources
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