BRIC was originally founded as an informal grouping of emerging markets and developing economies, consisting of Brazil, Russia, India and China, in 2009. In 2010 South Africa joined as a full member and the organisation became known as BRICS in 2011. It has since expanded to include Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. In 2025, Indonesia became the first South-East Asian country to join the bloc.

The chair of BRICS rotates annually. South Africa held the chair in 2023, followed by Russia in 2024. BRICS is designed as an alternative to the G7 bloc of the world's largest economies, and it represents nearly half of the global population. It has introduced initiatives that compete with those of the G7 economies, such as the New Development Bank and the proposed BRICS basket reserve currency. These are intended as formal measures to offer an alternative to the current international monetary regime, particularly the use of the US dollar as the international reserve currency.

But with BRICS planning to launch an alternative international reserve currency, what would this mean for global trade and national economies?

What is the BRICS economic plan?

The BRICS economic summit in February 2024 drafted a report that included a list of initiatives and recommendations through which member states could improve the international monetary and financial system.

At this  summit, BRICS announced plans to create a multilateral digital settlement and payment platform called BRICS Bridge, to help bridge the gap between the financial markets of BRICS member countries and increase mutual trade.

Apart from challenging the dominance of the US dollar and the International Monetary Fund in global economic markets, BRICS is also driven by the changing political and economic positions of its members. By 2023, emerging markets made up more than 60% of global GDP growth over the previous 10 years (measured at purchasing power parity, or PPP). This shift is partly reflected in the changing patterns of international trade flows. In 1995, just 10% of global goods were traded among emerging markets and developing economies (EMDEs). By 2022, that figure had increased to 26% – and the BRICS report estimated that it will reach 32% by 2032.

However, these significant changes in the global economy are not reflected in international investment flows, which still favour mostly rich, Western countries. These investment flows from advanced economies to other advanced economies made up 63% of total investment flows in 2022 (the last year fully measured to date), which disproportionately benefits rich countries.

From 2022, only 11% of global investment flows went from EMDEs to other EMDEs, which is a modest increase from 8% in 2010. Most global investment still flows between advanced economies, despite EMDEs contributing more than 60% of global economic market growth over the past decade.

As a response to this imbalance, BRICS has proposed the creation of a BRICS cross-border payment initiative (BCBPI) – a platform that will enable its members to trade with one another in their national currencies, without relying on the US dollar, other reserve currencies, and the SWIFT interbank communication system that is currently the international standard.

Another key element of BRICS economic planning is the establishment of a BRICS Grain Exchange and an associated pricing agency, with centres for trade in commodities like grain, oil, natural gas, and gold. This exchange could also help settle trade imbalances.

Could a BRICS currency replace the US dollar?

The BRICS 2024 report revealed that, in the short to medium term, the bloc will promote trade and investment in national currencies, through the BCBPI. However, BRICS has explicitly stated that it will not create an international unit of account to challenge the US dollar’s role as the global reserve currency. There is a concern that a move like this would be too destabilising for an international financial system that has operated since the Bretton Woods Conference in 1944 with the US dollar as the global reserve currency.

De-dollarising, however, might not only be a question of instituting an alternative international currency. In the international financial system, trade in goods makes up a small percentage of total transactions – the vast majority involve capital flows into and out of bonds, stocks, and the foreign exchange market, along with trillions of dollars in derivatives (a staggering $715 trillion as of June 2023). In contrast, total global merchandise trade in 2023 was $23.8 trillion, according to the World Trade Organization. In other words, it may be easier to de-dollarise international trade in goods than to de-dollarise savings and investment.

BRICS policy statements are geared towards redesigning the current monetary and financial system to promote a more egalitarian use of global wealth and trade. While the system has in recent decades contributed to globalisation, trade, and economic growth, it has failed to address complex challenges such as climate change, technological innovation, rising inequality, long-term demographic changes, and escalating geopolitical conflicts in a multilateral world – issues that have become much more urgent in recent years.

Donald Trump’s reaction to BRICS

In response to BRICS acknowledging the discussion of possible alternatives to the US dollar as the global benchmark currency reserve, the US president issued a stark warning to BRICS member states when he initially threatened to impose 100% tariffs on their exports to the US – a hardline stance aimed at maintaining the supremacy of the dollar in global trade. On Friday, 1 August 2025, the US imposed 30% tariffs on South African imports. Trump’s apparent policy is to impose trade tariffs as a bargaining chip when negotiating trade terms with international partners. However, the move also underscores his administration’s unease with the growing influence of BRICS. 

Despite these concerns, the US dollar remains the world’s primary reserve currency, with most international transactions conducted in dollars. Its role as a trusted store of value, coupled with the vast liquidity of US financial markets, has made it indispensable for global trade and investment. Trump’s latest threats may well be interpreted as a pre-emptive strike to protect this status.

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