Lorenzo Maria Pacini
Ahead of the New Delhi summit to be held in September, let's take stock of the progress of the BRICS+ strategy.
Ahead of the New Delhi summit to be held in September, let's take stock of the progress of the BRICS+ strategy.
The legacy of Bretton Woods
In July 1944, in New Hampshire, forty-four nations signed the agreements that would govern global finance for the next three decades. The U.S. dollar was pegged to gold at thirty-five dollars per troy ounce; other currencies were pegged to the dollar. It was a simple order, almost brutal in its geometry: all the world's economies orbited around the American sun.
That order collapsed in August 1971, when President Nixon unilaterally suspended the dollar's convertibility into gold. But the collapse of the system, paradoxically, did not weaken the U.S. currency. It strengthened it. Without its metallic anchor, the dollar became what economists call a "global fiat currency": its value no longer depended on a reserve of precious metal but on collective confidence in the U.S. economy, institutions, and military strength. A confidence that, for decades, no competitor was able to undermine.
The mechanism was self-perpetuating. Oil-exporting countries accepted payments in dollars-the so-called petrodollars-and deposited the surplus in banks in New York and London, which recycled them as loans to oil importers. The dollar was not just the U.S. currency: it was the oil that lubricated the entire mechanism of world trade. The dollar was an asset "too valuable to abandon and too difficult to replace."
There is one statistic that central bankers around the world are watching with increasing attention: the dollar's share of global official reserves, as tracked by the International Monetary Fund through the COFER database. In 2000, that share stood at 71.1 percent. Today it has fallen to 57.4 percent-the lowest level since the IMF began publishing disaggregated data.
Thirteen and a half percentage points in twenty-four years. A slow decline, seemingly insignificant when measured year by year. But it is continuous, and shows no signs of a structural reversal. This contraction is not an artifact of exchange rate volatility: when adjusted for fluctuations in the dollar's value relative to other currencies, the flight from dollar reserves is even more pronounced than the nominal statistics suggest. Central banks are actively reducing their exposure to the dollar, not merely suffering the devaluation of their portfolios.
The natural question is: where is this money going ? Partly to the euro, partly to the yen and the pound. But a growing share is ending up in what IMF statisticians call "non-traditional currencies": the Australian and Canadian dollars, the South Korean won, and above all, the Chinese renminbi. The latter was absent from COFER data until 2015; today it accounts for 2.8 percent of global reserves-still a small share, but one that is growing steadily.
Another trend is harder to quantify but perhaps more significant: gold. The world's central banks purchased more than 1,000 metric tons of net gold in both 2022 and 2023. Russia holds 2,332 metric tons, and China holds 2,235 metric tons according to official figures-though the actual amount is likely higher. Gold does not pay interest, incurs storage costs, and cannot be frozen by a U.S. Treasury decree. Since February 2022, this last characteristic has become the most appealing of all.
On February 24, 2022, just hours after the start of the conflict between Russia and Ukraine, Western governments announced the freezing of approximately $300 billion in Russian sovereign reserves held in Western banks. It was an unprecedented measure in the history of modern finance: for the first time, property rights over sovereign reserves were suspended as an act of foreign policy.
The psychological impact was immediate and global. It wasn't just Russian officials who were wondering whether their reserves were safe. Central bankers in dozens of countries-from Saudi Arabia to India, from China to Egypt-suddenly found themselves contemplating a risk they had always taken for granted as implicitly ruled out: that dollars held abroad could be frozen by a hostile U.S. administration. As Vladimir Putin noted in a speech in November 2024, Russia had never sought to abandon the dollar-it had simply been denied the right to use it.
The issue is not a technical one. It is political in the most fundamental sense: the dollar is an instrument of power, and whoever controls it can exert economic coercion on a global scale. This phenomenon is called " weaponized interdependence": the United States' ability to transform the nodes of the global financial system-correspondent banks, the SWIFT interbank messaging system, the Treasury market-into instruments of geopolitical pressure.
The American paradox
There is a fundamental irony in this story that American economists and strategists struggle to acknowledge openly: the dollar's main enemy is not the BRICS, nor is it China, nor is it the renminbi. It is the foreign policy of the United States itself. Every time Washington imposes financial sanctions-on Russia, Iran, North Korea, Venezuela, or hundreds of private entities-it reduces the dollar's appeal as a neutral and reliable reserve currency. The dollar's comparative advantage lay precisely in its apparent neutrality: everyone used it because no one expected Washington to prevent its use for legitimate trade purposes. That neutrality has been irreparably compromised.
President Trump, with his threat of 100 percent tariffs on countries that promote alternatives to the dollar, has made explicit a tension that had always been implicit: maintaining the dollar's centrality now requires active coercion, no longer merely market forces. It is a qualitative change, not merely a quantitative one. The difference between a hegemon that maintains its primacy through its own strength and one that imposes it through threats is the difference between trust and forced dependence. The former is self-sustaining; the latter erodes over time.
In the medium term-a horizon of ten, fifteen, or twenty years-it is highly likely that the international monetary system will continue to move toward greater fragmentation: not a world without the dollar, but a world with less dollar, more renminbi, more gold, and more local currencies in regional transactions. This is not a revolution. It is, to use the technical term of economists who study these processes, "practical gradualism." Slow, contested, and reversible over short stretches. But structurally oriented in only one direction.
From five to
In October 2024, in Kazan, Russia, the most significant transformation of the BRICS bloc since its founding took place. Egypt, Ethiopia, Iran, and the United Arab Emirates joined as full members; Indonesia followed in January 2025. An intermediate category of "partner countries" was extended to eleven other states, ranging from Bolivia and Cuba to Nigeria, Uganda, Belarus, Kazakhstan, Uzbekistan, Malaysia, Thailand, Vietnam, and Turkey. In one fell swoop, the group that in 2006 was merely an acronym coined by a Goldman Sachs economist became the largest coalition of emerging economies ever institutionalized.
The resulting figures are staggering. The BRICS+ bloc, in its current composition, accounts for about 37 percent of global GDP measured in purchasing power parity, 46 percent of the world's population, and about 23 percent of international trade. It surpasses the G7 in terms of aggregate economic output. If Saudi Arabia-which has been invited but has not yet formally joined-were added, the bloc would gain decisive influence over global energy markets.
But the aggregate figures mask extraordinary heterogeneity. The bloc includes China, the world's second-largest economy with a GDP at purchasing power parity equal to 18.4 percent of the global total, and South Africa, which contributes a mere 0.6 percent. It includes Russia, subject to the most severe financial sanctions ever imposed on a major economy, and the United Arab Emirates, one of the world's leading financial centers and a close ally of the United States. It includes India, which has explicitly stated that it does not wish to create a common BRICS currency, and Brazil, whose President Lula has publicly called for "alternative means of payment" among the bloc's member countries.
Managing this diversity is the project's central political challenge. The consensus-based decision-making mechanism-which in practice amounts to unanimity-turns every reluctant member into a veto player. India, which in September 2024 declared that the country "has never had any problems with the dollar," can block any collective initiative that exceeds its diplomatic comfort threshold.
The New Development Bank: How new is it?
Of all the institutions created by the bloc, the New Development Bank-NDB-is the one with the most concrete track record. Founded in 2014 in Fortaleza and operational since 2016, it had approved $42.9 billion for 139 projects as of 2024. Its 2022-2026 strategy sets an explicit goal: 30 percent of its financing must be denominated in the national currencies of member countries. It has issued bonds in renminbi on the Shanghai interbank market, in South African rand, and in Indian rupees. It is building, brick by brick, something the Bretton Woods institutions had never been interested in building: a capital market in non-dollar currencies for emerging economies.
The macroeconomic impact is beginning to be measurable. A recent econometric study published in 2026 in the *International Review of Economics and Finance* analyzed 99 countries from 2004 to 2024 using a differences-in-differences method. The result is significant: countries that had access to BRICS financial cooperation-the NDB plus the Contingent Reserve Arrangement-exhibit significantly lower exchange rate volatility compared to the control group. The reduction amounts to approximately 0.1 units on the volatility measure used, equivalent to about a 14 percent decrease in exchange rate fluctuations. And the effect persists over time: it remains statistically significant five years after joining the BRICS institutional framework.
The mechanism is twofold. On the one hand, the NDB promotes lending in local currency, reducing what economists call the "original sin" of emerging economies: the inability to borrow in their own currency. When a country borrows in dollars but receives revenue in local currency, any depreciation of the exchange rate automatically increases the burden of debt, creating cycles of instability. The expansion of domestic credit breaks this cycle. On the other hand, the NDB's institutional strength attracts long-term foreign direct investment-which is more stable and less volatile than the speculative flows that characterize dollar-dominated financial markets.
The second major initiative emerging from the Kazan summit is the BRICS Cross-Border Payment Initiative (BCBPI). The idea is technically elegant: a digital network connecting the central banks of participating countries, enabling transactions in national currencies without going through the SWIFT messaging system or dollar-denominated clearing circuits. If the system were to operate at full capacity, a Russian company could pay an Indian supplier in rupees, and a Chinese company could settle a transaction with Brazil in reais, without a single cent of the transaction passing through American or European banks.
On paper, the benefits are threefold: eliminating the risk of sanctions, reducing transaction costs, and speeding up payments. The Kazan Declaration adopted the Russian proposal as a working basis, though it characterized it as "voluntary and non-binding"-a phrase that, in multilateral diplomacy, means not all participants are ready to commit to it operationally. The BCBPI Technical Report, approved at the 2025 meeting of BRICS finance ministers and central bank governors, confirmed this direction without setting operational deadlines.
Meanwhile, China already has a functioning alternative system: the CIPS (Cross-Border Interbank Payment System), launched in 2015. As of the end of 2024, it had 1,500 direct and indirect participants in 109 countries, with average daily transaction volumes of approximately 500 billion yuan. It is not yet a systemic alternative to SWIFT-it relies partially on SWIFT's messaging infrastructure-but it is a functional alternative for renminbi transactions, and its importance is growing with each passing month.