HOW BRICS COUNTRIES PLAN TO REDUCE DOLLAR DEPENDENCE

Hawkmont Research
Apr 4
38 min read

Macro Strategy | Geopolitical Finance Classification: Institutional Distribution Only | April 2026

Research Coverage: Global Macro / Geopolitical Finance / Reserve Currency Strategy Distribution: Macro Portfolio Managers, EM Specialists, Fixed Income Strategy, Commodities Desks

This report reflects analysis as of April 2026. Data is sourced from IMF COFER, SWIFT RMB Tracker, World Gold Council, PBOC, BIS, New Development Bank disclosures, and publicly available BRICS summit documentation. All investment implications are analytical assessments, not recommendations.

Hawkmont Research analyzes how BRICS nations are building a parallel financial system to reduce dollar dependence — and what it means for gold, oil, and US Treasuries.

EXECUTIVE SUMMARY

The de-dollarization campaign being prosecuted by the BRICS bloc is not a geopolitical narrative. It is a multi-decade program of financial infrastructure construction, sovereign reserve reallocation, and bilateral settlement architecture that is measurably, if incrementally, eroding the structural underpinnings of dollar hegemony.

This report provides an institutional-grade assessment of the mechanisms, the actors, the timeline, and the investable implications. Our core thesis: the dollar is not losing its reserve currency status in any timeframe relevant to a medium-term portfolio. But the architecture being built around it is real, increasingly operational, and will impose compounding marginal costs on dollar dominance that are not yet priced into US term premium, gold supply-demand models, or EM currency frameworks.

Key Findings

The dollar's share of global foreign exchange reserves declined from approximately 85% in the 1970s to roughly 57-59% by 2024-2025 Diplomatist, a structural erosion spanning five decades that has not reversed despite multiple cycles of dollar strength.
BRICS+ central banks added nearly 800 metric tonnes of gold in 2025 alone. Combined BRICS gold reserves now exceed 6,000 tonnes, approximately 20-21% of total global central bank gold holdings. Russia holds 2,336 tonnes and China 2,298 tonnes, together representing 74% of the bloc's total. Watcher Guru
In 2024, total annual volume passing through CIPS rose 43% to RMB 175.49 trillion ($24.45 trillion), driven by a 24% increase to 8.2 million transactions, with both volume and transaction count having more than tripled since 2020. FXC Intelligence
China has settled approximately 53% of its cross-border trade and investment transactions in yuan, up from a dollar share of 83% of China's cross-border flows in 2010. Atlantic Council This is the single most important data point in the de-dollarization debate.
On October 31, 2025, BRICS researchers launched a pilot of "The Unit," a gold-anchored digital settlement instrument structured as 40% gold and 60% BRICS currency basket. CCN This is the most advanced attempt at creating a non-dollar wholesale settlement mechanism since the euro's introduction.
The New Development Bank primarily borrows and lends in dollars CADTM, exposing a central contradiction in BRICS rhetoric: its flagship development institution remains substantially dollarized even as member states publicly campaign against dollar dependence. However, the NDB aims to increase the share of loans issued in local currencies to 30% by 2026, up from 22%. Capmad
At the BRICS summit in Rio de Janeiro in July 2025, no concrete progress toward de-dollarization was made at the institutional level. The final declaration contained no mention of a common currency or coordinated strategy to reduce dollar use. CADTM The gap between BRICS summit rhetoric and actionable policy remains substantial.

De-Dollarization Timeline: Hawkmont Base Case

Short-Term (2026-2028): Bilateral local currency settlement expands across South-South trade corridors. CIPS participant count approaches 2,500. The Unit pilots across three to four BRICS+ trade lanes. eCNY tested in cross-border BRI settlement at scale. NDB local currency lending reaches its 30% target. Dollar's reserve share declines toward 55%. No institutional disruption to the dollar-based system.

Medium-Term (2029-2032): Yuan's SWIFT share approaches 6-8% as CIPS captures more transactions outside SWIFT visibility. mBridge operational and processing material volumes of energy settlement. A fifth to a quarter of global oil purchased by China is settled in yuan. Dollar's reserve share approaches 50-53%. US Treasury foreign sovereign demand structurally lower, contributing to a term premium in the 150-200 basis point range.

Long-Term (2033-2036): A functional dual-track monetary architecture exists globally: dollar-based for Western-aligned capital markets and G7 trade flows; yuan-centric and multi-currency for South-South, BRICS+ adjacent, and BRI-linked trade. Neither track commands uncontested global dominance. The era of dollar monopoly ends without a dollar collapse.

Primary Investor Implications

Gold: Structural long. Central bank demand is now a permanent price floor with a politically motivated demand base that is insensitive to yield, price, or traditional portfolio allocation logic.

US Treasuries: Short-term neutral, medium-term bearish on term premium. Foreign sovereign demand softening at the margin is the mechanism, not a sudden exit. Duration requires more premium compensation than current pricing implies.

Oil Pricing: The petrodollar architecture is cracking at the edges, not shattering at the center. Energy investors need scenario models for multi-currency oil pricing.

EM Currencies: Selective positives. The rupee, dirham, and real are gaining bilateral settlement roles that reduce their dependence on dollar liquidity. EM central banks with genuine local currency settlement frameworks have structurally improved monetary policy autonomy.

Yuan-Denominated Assets: Increasingly relevant for portfolios with EM and commodity exposure, but capital account restrictions remain the binding constraint on yuan reserve currency candidacy.

THE STRUCTURAL CASE FOR DE-DOLLARIZATION

2.1 Sanctions Risk and the Weaponization of Reserve Currency Status

The expropriation of approximately $300 billion in Russian central bank reserves in 2022 was not, in the context of financial history, an unprecedented act. It was, however, an act conducted at a scale, against a G20 economy, in a manner that could not be dismissed as a fringe scenario by any central bank risk committee operating outside the US-aligned sphere.

Before 2022, the weaponization of the dollar system manifested primarily through trade and sectoral sanctions: asset freezes on individuals, restrictions on specific institutions, denial of SWIFT access to banks rather than sovereigns. The Russian reserve freeze was categorically different. It demonstrated that sovereign reserve assets held in Western custodial jurisdictions were not safe-harbor stores of value. They were leverage.

Russia's removal from SWIFT after the start of the Russia-Ukraine war, trade tensions between China and the US, and the influence of Federal Reserve policies on global markets have become the geopolitical and financial motivations now shaping concrete policy decisions around how BRICS members conduct cross-border transactions.

The lesson absorbed by Beijing was direct and operational: any scenario in which China moved on Taiwan, conducted operations that triggered Western sanctions, or simply became the target of US economic pressure would expose the People's Bank of China's foreign exchange reserves to the same treatment. China's reserves stood at approximately $3.2 trillion at the time of the Russian freeze. A material portion was held in US Treasuries and other dollar-denominated instruments held through Western custodians. That exposure is a strategic liability.

The response was not panic. It was program. China accelerated gold purchases, began transferring Treasury holdings to custodians with reduced US jurisdictional reach, expanded CIPS connectivity, and deepened bilateral local currency settlement agreements across its trade network. None of these actions were announced as de-dollarization initiatives. They were presented as portfolio diversification and financial efficiency measures. The substance was sanctions-proofing.

For India, Brazil, Saudi Arabia, and the Gulf states, the Russian precedent created a different but related concern: not the certainty of being sanctioned, but the demonstrated possibility. A reserve currency whose custodians can be compelled by a single sovereign to freeze assets is not a neutral reserve vehicle. It is a political instrument. That realization, more than any ideological commitment to multipolarity, is driving the behavioral change in central bank reserve management globally.

2.2 Federal Reserve Transmission and the Asymmetry of Dollar Dependence

The dollar's reserve currency status creates a structural transmission channel that runs in one direction: from the Federal Reserve's domestic mandate to the balance sheets, debt service costs, and monetary policy constraints of every economy that holds dollar reserves or carries dollar-denominated debt.

When the Fed raised rates by 525 basis points between March 2022 and July 2023 to address US inflation, the consequences were global and automatic. Dollar appreciation forced EM central banks to choose between defending their exchange rates and supporting their domestic economies. Countries with dollar-denominated sovereign debt saw their real debt burdens increase in local currency terms. Capital that had been allocated to EM markets on the basis of the carry trade reversed, compressing EM asset prices.

None of the countries that suffered these consequences had any voice in the Fed's decision, any representation on its board, or any mechanism for influencing its mandate. The Fed's mandate is US inflation and US employment. The externalities are global.

As NDB President Dilma Rousseff put it: "Any business or government that borrows in foreign currency becomes subject to decisions made by the Federal Reserve or other central banks in developed nations." That statement, made at the NDB Annual Meeting in July 2025 by the head of BRICS' flagship development institution, encapsulates the structural grievance precisely.

Reducing dollar dependence is, in a significant part, a campaign to reclaim monetary sovereignty: the ability to set domestic interest rates without being forced to shadow the Fed cycle, to run counter-cyclical fiscal policy without triggering currency crises, and to finance infrastructure investment without exposure to US monetary tightening.

2.3 Trade Settlement Exposure

The dollar's dominance in trade settlement is more entrenched than its reserve share suggests, and it operates through a different mechanism than reserve holding. The dollar share of global trade finance was 84.1% in April 2024. This means that two non-US entities trading a non-US commodity with each other must, in most cases, convert through the dollar, use dollar-clearing infrastructure, and expose their transaction to potential US jurisdictional oversight.

The exposure is not merely theoretical. Any transaction that touches the dollar clearing system, specifically the Clearing House Interbank Payments System (CHIPS) which processes approximately $1.9 trillion in daily transactions, falls under US legal jurisdiction. US prosecutors and regulators have repeatedly used CHIPS clearing as the lever through which to impose secondary sanctions: foreign banks that process transactions for sanctioned entities through the dollar clearing system face US legal liability, which in practice means exclusion from dollar correspondent banking, which in practice means exclusion from global trade finance.

This jurisdictional reach is what BRICS members are attempting to escape. Not the dollar per se, but the legal and political chokepoints that dollar denomination creates.

2.4 Reserve Diversification and the Search for Non-Correlated Assets

EM central bank reserve portfolios have an inherent concentration problem: the dollar's dominance means that the primary reserve asset is also the primary source of the exchange rate risk that reserves are intended to hedge. When the dollar strengthens, dollar reserves appreciate in local currency terms, providing a cushion. When the dollar weakens, they depreciate, precisely when dollar-denominated debt becomes easier to service. This is not a logical arrangement from a risk management perspective.

The shift toward gold, and toward non-dollar currency reserves, reflects straightforward portfolio diversification logic. The World Gold Council's 2025 survey reveals that 73% of global central bankers believe the US dollar's share in global reserves will decrease over the next five years.

This is not an activist position. It is a portfolio manager's assessment of an overconcentrated asset class.

2.5 Political and Strategic Motivations: Disaggregating the BRICS Agenda

It is analytically important to disaggregate BRICS political motivations because they are not uniform and in some cases are actively contradictory.

China's motivation is hegemonic succession: the creation of yuan-centric financial architecture that would, over a generational timeframe, position the yuan to displace the dollar as the primary global reserve and settlement currency. This is a long-term strategic objective, not a near-term crisis response. It is pursued through patient infrastructure construction: CIPS, eCNY, BRI lending, commodity pricing reform, bilateral swap agreements. China's approach is systemic.

Russia's motivation is immediate survival under sanctions. Russia does not have the luxury of a multi-decade strategy. It needs functioning payment rails today. Its de-dollarization is reactive, operationally driven, and in significant part conducted through Chinese infrastructure, which creates a dependency on Beijing that Moscow does not advertise.

India's motivation is transactional autonomy: the ability to purchase Russian oil in rupees, reduce bilateral transaction costs with Gulf partners, and participate in multilateral trade agreements without dollar intermediation. India is not pursuing de-dollarization as a strategic objective. It is pursuing it as a cost-reduction and risk-management measure in specific bilateral contexts.

Brazil's motivation is political prestige and systemic reform: Lula's repeated advocacy for a BRICS common currency reflects a genuine belief that the existing monetary order is unjust and that Brazil deserves a seat at the table. The substance of Brazil's contribution is less important than its diplomatic legitimacy.

The aggregation of these distinct motivations into a coherent BRICS de-dollarization "strategy" is a simplification. What exists is a set of overlapping interests that generate parallel infrastructure investment, not a coordinated campaign directed from a single center.

THE OPERATIONAL MECHANISMS OF DE-DOLLARIZATION

3.1 Bilateral Trade in Local Currencies

Bilateral local currency settlement is the most operationally mature and measurably significant component of the de-dollarization program.

China-Russia: In 2024, well over 90% of China-Russia bilateral trade is carried out in Russian rubles and Chinese yuan. This is not a gradual shift. It is a near-complete displacement of the dollar from the world's largest bilateral commodity trade relationship by volume. The shift was accelerated by Russia's SWIFT exclusion in 2022 but had been building since 2014. The practical mechanism is direct yuan-ruble exchange through dedicated bilateral banking channels, bypassing correspondent banks and dollar clearing entirely.

India-Russia: India's response to Russia's SWIFT exclusion was to establish rupee settlement for oil purchases. The mechanism works through designated Indian banks maintaining rupee accounts for Russian counterparties. Russia accumulates rupees through oil sales and deploys them through imports of Indian goods, services, and technology. The arrangement is not frictionless: Russia has periodically accumulated excess rupee balances that it cannot efficiently deploy, creating settlement asymmetries. India has begun purchasing Russian oil in rupees, and bilateral local currency trade frameworks have been expanded to over 20 of India's trading partners.

Brazil-China: In March 2023, Brazil and China agreed to use their currencies in bilateral trade. China is Brazil's largest trading partner, being the destination of more than 30% of Brazilian exports and the origin of more than 20% of imports. The scale of this bilateral relationship means that its progressive local currency settlement represents a material shift in global dollar demand. Given the trend toward surplus flows on the Brazilian side, Brazil will accumulate reserves in RMB if all bilateral trade transactions become covered by the agreement. Brazil becoming a structural accumulator of yuan reserves would represent a qualitative change in the global reserve landscape.

India-UAE: The Abu Dhabi National Oil Company (ADNOC) and the Indian Oil Corporation Limited (IOCL) completed the first-ever crude oil transaction under the Local Currency Settlement framework on August 14, 2023. India has already begun trade in local currencies with the UAE, which became a BRICS member in 2024. The AED-INR settlement framework creates a non-dollar energy payment corridor between two of the most important economies in the India Ocean trade network.

The aggregate picture is of a rapidly expanding web of bilateral settlement agreements that, corridor by corridor, remove the dollar from transactions that would previously have routed through it automatically.

3.2 Gold Accumulation: The Sanctions-Proof Reserve Asset

Gold has one property that no other financial asset possesses: it cannot be frozen by a foreign government. It carries no counterparty risk, no jurisdictional exposure, and no dependence on any payment network or custodial institution that could be compelled to act against a holder's interests.

In 2024, central banks collectively added 1,045 metric tonnes to global gold reserves, marking the third consecutive year that annual purchases exceeded 1,000 metric tonnes. The Daily Economy

BRICS+ central banks added nearly 800 metric tonnes in 2025 alone. Combined BRICS gold reserves now exceed 6,000 tonnes, representing approximately 20-21% of total global central bank gold holdings. Russia holds 2,336 tonnes, China 2,298 tonnes, with India following at 880 tonnes. Watcher Guru

The combined BRICS nations now control about 50% of global gold production through a combination of output from member states and strategic partners. China produced 380 tonnes in 2024 and Russia 340 tonnes. BRICS is not merely accumulating gold as a reserve asset. It is asserting structural control over the global physical gold supply chain.

In October 2025, BRICS launched a dedicated precious metals exchange enabling members to trade physical gold and other metals in non-dollar terms. This is not symbolic. It is an attempt to create a non-dollar price discovery mechanism for the asset that underpins the de-dollarization architecture. Gold hit $4,750 in late 2025 and has remained above fair value midpoints since. The Amundi Investment Institute projects fair value will continue climbing through 2027, with the upper band approaching $5,800.

3.3 Alternative Payment Infrastructure: CIPS, SPFS, mBridge, and BRICS Pay

CIPS (Cross-Border Interbank Payment System)

CIPS processes 26,000 transactions daily at an average value of RMB 482 billion ($67 billion), with peak capacity hitting 30,000 during high-demand periods. By April 2025, Russia was routing 25% of its $120 billion annual energy exports through the system.

In May 2025, CIPS reported the number of participants had risen by 10% year-on-year to 1,683, with the vast majority being indirect participants. Asia accounts for 73% of the share of indirect participants, with 17% being European institutions.

The European representation is significant: it indicates that Western financial institutions are building CIPS connectivity not for ideological reasons but for commercial ones, as yuan-denominated trade volumes make CIPS access operationally necessary.

A critical analytical point for investors: SWIFT data on yuan payment share is structurally incomplete. According to a 2022 Bank of France report, about 80% of RMB payments use SWIFT messaging as many non-Chinese institutions have yet to install translators for CIPS messaging, but the portion of RMB payments going directly through CIPS will not be captured in SWIFT data, giving rise to under-estimation of the RMB share in international payments.

CIPS offers lower fees, averaging 0.01% per transaction versus SWIFT's 0.05%-0.1%. For high-volume commodity traders, this cost differential is commercially meaningful independent of any geopolitical consideration.

mBridge (Multi-CBDC Platform)

By late 2025, the mBridge project, a digital currency platform backed by the central banks of China, the UAE, Saudi Arabia, Thailand, and Hong Kong, had processed over $55.5 billion in transactions, with the digital yuan accounting for 95% of the volume. In March 2026 alone, mBridge handled over $55 billion in trade.

mBridge is technically the most sophisticated piece of de-dollarization infrastructure in existence. It uses central bank digital currencies to enable direct central-bank-to-central-bank settlement, entirely eliminating the correspondent banking relationships through which US jurisdictional reach operates. Saudi Arabia's participation in mBridge, while it has not yet formalized BRICS membership, is one of the most geopolitically significant financial developments of 2025.

BRICS Pay

In October 2024, during the BRICS summit in Kazan, members discussed the development of BRICS Pay, a decentralized payment messaging system aimed at facilitating transactions in local currencies, designed to circumvent Western-controlled systems such as SWIFT.

BRICS Pay remains in development. Its architecture is blockchain-based, designed to support both retail and wholesale transactions. Commercial rollout timeline is unclear.

Russia's SPFS

Russia's System for Transfer of Financial Messages (SPFS) is a domestic messaging network operationally equivalent to SWIFT within Russia's financial system. It now connects financial institutions across the Commonwealth of Independent States and has been linked to CIPS for China-Russia transactions. Its global scalability is minimal, but it provides Russia with sanctions-resilient domestic payment infrastructure and a bridge to Chinese systems.

3.4 Commodity Pricing Outside the Dollar

Energy

INE's Shanghai crude oil futures contract market is now the world's third most-traded crude oil futures contract market, following only WTI and Brent in trading volume. BBVA Research

In 2023, a fifth of global oil trades were made in non-USD currencies. Russia's Gazprom Neft has settled all of its crude oil sales to China in renminbi since 2015. Iran routes its oil to China via alternative channels, with settlements conducted entirely outside the US banking system. Venezuela and Indonesia have also settled portions of their China-bound oil trade in yuan.

Deutsche Bank analysts noted that the petrodollar system originated from an agreement made in 1974 involving Saudi Arabia, which linked oil pricing to the dollar and directed surplus investments toward US assets. The system created an incentive for global supply chains to use dollars, as oil is a fundamental component for manufacturing and transportation.

The pressure on this system is now structural: Deutsche Bank indicated that pressure on the petrodollar system existed even prior to the current conflict, citing US sanctions on Russian and Iranian oil that fostered alternative currency use in unofficial trading.

Gold and Metals

The October 2025 BRICS precious metals exchange is designed to enable non-dollar price discovery and settlement for physical gold and other metals. If it achieves material volume, it creates a competing benchmark to the London Bullion Market Association's dollar-denominated gold fix, which has served as the global gold pricing reference since the early 20th century.

3.5 Digital Currencies and CBDCs

An ongoing project to develop a digital multi-currency platform is being implemented by the central banks of China, Hong Kong, Thailand, and the United Arab Emirates, initially supported by the Bank for International Settlements. This is mBridge. Its institutional pedigree matters: the BIS imprimatur provides multilateral credibility, and its subsequent distancing from the project in 2024 reflects Western political pressure rather than technical assessment.

Russia, China, and India are collaborating to interlink their digital ruble, yuan, and rupee. BRICS CBDC interoperability has become one of the priorities of the BRICS de-dollarization plan in 2026.

The strategic importance of CBDC interoperability is that it enables atomic settlement, transactions that settle in real time without correspondent bank intermediation, directly between sovereign-issued digital currencies. This architecture structurally eliminates the dollar clearing layer from bilateral trade. Where conventional de-dollarization requires both parties to establish local currency accounts, maintain liquidity in the counterparty's currency, and manage the associated FX risk, CBDC-to-CBDC settlement can theoretically automate all of these functions through pre-programmed exchange rate mechanisms and instant finality.

3.6 Yuan Trade Settlement: The Core Data Series

In 2024, the Bank of China's domestic and overseas institutions completed cross-border yuan settlements exceeding 43 trillion yuan ($6.04 trillion), up 31% year-on-year, while cross-border yuan clearing volume reached 131.4 trillion yuan, up 49%.

The yuan's usage in cross-border transactions is steadily increasing, with the trend particularly pronounced in Global South economies. Southeast Asia, the Middle East, Africa, and Central Asia are increasingly adopting the yuan as a trade settlement currency.

In December 2024, the RMB remained the fourth most active currency for global payments by value, with a share of 3.75%, up from the 2023 average of 3.0%. RMB ranked as the third most-used currency in trade finance, accounting for 6% of international trade transactions in December 2024, following the USD and EUR, up from the 2023 average of 4.8%.

The gap between yuan's overall payment share (approximately 3%) and its trade finance share (6%) reflects the currency's particular traction in commodity trade financing, exactly the corridor where de-dollarization has the most strategic importance.

MEMBER-BY-MEMBER STRATEGIC ASSESSMENT

4.1 China: The Architect and Primary Beneficiary

China's de-dollarization strategy is the only one among BRICS members that constitutes a coherent, multi-generational program rather than a tactical response to immediate pressures. It operates across six simultaneous vectors: payment infrastructure, commodity pricing, development lending, digital currency, swap agreements, and capital market access.

Payment Infrastructure. CIPS is Beijing's most important de-dollarization asset. Its growth trajectory from 19 direct participants at launch to 1,683 institutions across 112 countries by mid-2025, and its 43% volume growth in 2024, reflects deliberate expansion. In June 2025, CIPS forged its first direct partnerships with six foreign banks in the Middle East and Africa, fitting into a wider narrative for countries seeking alternatives to dollar-based infrastructure or concerned about sanctions.

Commodity Pricing. The INE crude oil futures contract's ascent to third globally by volume is the result of a deliberate decade-long strategy to create yuan-denominated commodity price discovery. China is the world's largest importer of crude oil, iron ore, copper, soybeans, and numerous other commodities. As the largest buyer, it has market power to demand yuan pricing. It is using that power systematically.

BRI Lending. China's Belt and Road Initiative has approved over $1 trillion in infrastructure lending across 151 countries. A growing proportion of this lending is denominated in yuan. Borrowing countries must generate yuan revenues to service yuan loans. The BRI, viewed through this lens, is a structural mechanism for generating persistent global yuan demand.

eCNY Cross-Border Deployment. China has been able to settle about 53% of its cross-border trade and investment transactions in RMB, while the dollar's share has dropped to 43% from 83% in 2010. The deployment of eCNY in mBridge and other cross-border CBDC frameworks represents the next phase of this progression.

Capital Account Constraints. The binding constraint on yuan reserve currency candidacy remains China's capital account. Beijing's reluctance to permit full capital account convertibility reflects a rational prioritization: the 2015 RMB devaluation episode demonstrated that capital account opening under conditions of domestic financial stress can trigger destabilizing capital outflows at scale. Until China's domestic financial system is sufficiently stable to absorb capital account openness, the yuan will remain a settlement currency rather than a genuine reserve currency alternative.

The timeline for capital account liberalization is not a calendar. It is a condition. When China's property sector deleveraging is complete, domestic financial regulation is mature, and the PBOC has developed adequate macro-prudential tools, capital account opening becomes possible. That is a 2030s event at earliest.

4.2 Russia: Operational Necessity as Strategic Imperative

Russia's de-dollarization is not strategic. It is existential. Excluded from SWIFT, with approximately $300 billion in sovereign reserves frozen, and subject to comprehensive financial sanctions covering its banking system, energy sector, and major corporations, Russia had no choice but to construct alternative financial infrastructure at speed.

The speed has been remarkable. In 2024, well over 90% of China-Russia trade is carried out in Russian rubles and Chinese yuan. Russia has deployed SPFS domestically and linked it to CIPS for China transactions. It has built a domestic card payment system (Mir) to replace Visa and Mastercard. It has expanded gold reserves aggressively. It has established bilateral local currency frameworks with Iran, India, Turkey, and multiple CIS members.

Putin publicly stated in November 2024 that Russia was not seeking to move away from the dollar, thereby seeking to placate Trump, who had made it clear that any attempt to diminish the role of the dollar would be met with intense retaliation. Putin is also attempting to reduce the sanctions imposed on Russia following the invasion of Ukraine. This rhetorical retreat does not reflect a change in operational reality. Russia's financial system is de-dollarized by necessity. Putin's public statements are diplomatic signaling, not policy description.

The critical analytical point for investors: Russia's SWIFT exclusion is a permanent condition, not a temporary status. Even if some sanctions are relaxed through diplomatic settlement, the US would not restore Russia to SWIFT unconditionally, and Russia would not reconstitute dollar-denominated reserves at previous levels having experienced the freeze. Russia's financial infrastructure will remain non-dollar for the foreseeable future regardless of the geopolitical trajectory.

4.3 India: Strategic Ambiguity as Policy

India's position on de-dollarization is the most sophisticated and arguably the most instructive of any BRICS member. It is simultaneously the bloc's most enthusiastic bilateral de-dollarizer and its most consistent institutional opponent of a BRICS common currency or any financial arrangement that could compromise its access to Western capital markets.

India has begun purchasing Russian oil in rupees and has established a joint statement with Indonesia highlighting that using local currency would promote bilateral trade. India has already begun trade in local currencies with the UAE, which became a BRICS member in 2024.

India's rupee settlement program with Russia is commercially significant: Russia reportedly accumulated tens of billions of rupees through Indian oil purchases that it had limited ability to deploy, creating a structural surplus that forced India and Russia to negotiate investment channels for rupee recycling, including Russian investment in Indian defense manufacturing, pharmaceuticals, and infrastructure. This is not a smooth settlement mechanism. But it is a functioning one.

India's refusal to endorse a BRICS common currency reflects rational self-interest. India is a net capital importer. Its sovereign credit rating depends on perceived alignment with Western institutional norms. Its technology sector depends on US market access. Its defense procurement includes significant US-origin equipment that requires maintenance relationships that US sanctions could disrupt. India cannot afford to be classified alongside Russia as a dollar adversary.

India's strategy is therefore to extract the bilateral transaction cost and currency risk benefits of local currency settlement without joining any institutional framework that would require it to formally align against the dollar system.

4.4 Brazil: Diplomatic Champion, Structural Laggard

Brazil's President Lula has been the most vocal champion of BRICS monetary reform at the heads-of-state level. Lula had advocated for a common currency both at the 2023 BRICS summit held in Johannesburg and in a remote address at the 2024 summit in Kazan. Brazil's consistency on this position provides the bloc with Latin American political legitimacy and keeps the institutional currency debate alive when other members would allow it to expire.

In March 2023, Brazil and China agreed to use their currencies in bilateral trade. China is Brazil's largest trading partner, being the destination of more than 30% of Brazilian exports. Given the trend toward surplus flows on the Brazilian side, Brazil will accumulate reserves in RMB if all bilateral trade transactions become covered by the agreement.

Brazil's structural constraints are significant. Its sovereign debt is substantially dollar-denominated. Its inflation history, including chronic bouts of hyperinflation in the 1980s and 1990s, makes the real an implausible anchor for any regional settlement unit. Its financial system is deeply integrated with international capital markets that operate in dollars. And its Congress has shown no appetite for the domestic fiscal reforms that would be necessary to credibly support a more internationalized real.

Brazil's contribution to de-dollarization is primarily normative. It provides moral and diplomatic legitimacy to the bloc's ambitions, and it provides the Johannesburg-to-Rio continuity of BRICS presidency that maintains institutional momentum. Its financial contribution is real but secondary.

4.5 South Africa: The African Gateway

South Africa occupies a critical symbolic role in BRICS that exceeds its direct financial contribution to de-dollarization. It is the bloc's African anchor, providing geographic legitimacy for BRICS' claim to speak for the Global South. It hosts key BRICS institutional infrastructure and provides the diplomatic network through which the bloc engages with African Union members.

In September 2024, the NDB raised 1 billion ZAR (approximately $57 million) on the South African bond market. The issuance attracted bids exceeding 2 billion ZAR, underscoring investor enthusiasm for bonds in local currencies.

This ZAR bond program is operationally modest but symbolically important: it establishes a non-dollar capital market instrument from the NDB's South African regional office.

South Africa's financial system is deeply integrated with London-based capital markets. The JSE operates predominantly in dollar-correlated flows. The rand is one of the most thinly traded EM currencies relative to South Africa's economic size, limiting its utility as a bilateral settlement currency. South Africa's role in the de-dollarization agenda is facilitative rather than operational.

4.6 New Members: The Strategic Additions

United Arab Emirates. The UAE is the most consequential new BRICS member from a financial architecture perspective. Dubai is a Tier 1 global financial center with sophisticated payment infrastructure, deep correspondent banking networks, and established yuan settlement capability. The Abu Dhabi National Oil Company (ADNOC) and the Indian Oil Corporation Limited (IOCL) completed the first-ever crude oil transaction under the Local Currency Settlement framework on August 14, 2023. The UAE's participation in mBridge, the mBridge digital currency platform, gives BRICS access to a credible, internationally respected financial hub through which non-dollar settlement can be conducted with full institutional legitimacy.

Gulf sovereign wealth funds, including Saudi Arabia's Public Investment Fund (PIF) and Abu Dhabi's ADQ, are increasingly directing their investments toward China, particularly in high-growth sectors like technology and green energy. This capital flow reorientation is the financial mechanism through which yuan recycling occurs: UAE entities earn yuan through energy sales, deploy yuan in Chinese capital markets, and create a virtuous cycle of yuan demand that does not depend on dollar intermediation.

Iran. Iran routes its oil to China via a "dark fleet" of tankers, with settlements conducted entirely outside the US banking system. As of early 2026, approximately 166 million barrels of Iranian oil sat in floating storage near Chinese ports, representing a tangible flow of crude settled in yuan.

Iran is the bloc's most sanctions-hardened member, with decades of accumulated expertise in building alternative financial infrastructure under extreme duress. Its presence normalizes within BRICS the architecture of financial sanctions circumvention at scale.

Saudi Arabia. Saudi Arabia remains the most consequential undecided actor in the global de-dollarization narrative. Saudi Arabia previously stated that it is open to using the petroyuan instead of the petrodollar in the international oil market, and participated in Project mBridge aimed at researching and developing the use of CBDCs in international payments. However, since the Saudi riyal is pegged to the dollar, Riyadh will likely avoid making drastic moves that could weaken the dollar.

As of February 2025, Saudi Arabia remains engaged with BRICS activities but has not yet formalized its membership, reflecting its strategic considerations in balancing relationships with both Western nations and BRICS members. The kingdom is maximizing optionality. Any material shift toward yuan oil pricing for Chinese purchases would represent the single most significant event in the de-dollarization narrative to date, and the probability of this occurring over a five-year horizon is not negligible.

Egypt and Ethiopia. Both provide African demographic and geographic mass that reinforces BRICS' claim to Global South representation. Egypt's location at the nexus of African and Middle Eastern trade corridors gives it strategic relevance for any BRICS payment corridor expansion into Africa. Neither contributes meaningfully to the near-term financial architecture.

Indonesia. Indonesia's early-2025 accession brings the world's fourth-largest population and Southeast Asia's largest economy into BRICS. Indonesia's trade relationships with both China and the United States are substantial, and its interest in de-dollarization is primarily cost-driven: reducing transaction costs in bilateral trade rather than ideological alignment with an anti-dollar coalition.

THE BRICS CURRENCY DEBATE

5.1 A Common Currency: Why It Will Not Happen

The analytical baseline is unambiguous. At the BRICS summit in Rio de Janeiro in July 2025, the final declaration made no mention of the creation of a common currency or a coordinated strategy to reduce the use of the dollar. Only Lula continues to raise the idea of a common reserve currency among the BRICS leaders, and he does so infrequently. Vladimir Putin, who had previously shown interest, has clearly abandoned this prospect.

The structural reasons are not diplomatic. A monetary union requires, at minimum: a lender of last resort capable of providing emergency liquidity in the common currency; fiscal convergence sufficient to prevent asymmetric shocks from creating divergent monetary requirements; deep, liquid capital markets in the common currency to absorb reserve flows; political trust sufficient to subordinate national monetary sovereignty to a collective institution; and a governance structure that no single member can veto or dominate.

BRICS meets none of these criteria. China's economy is 15 times the size of South Africa's. India and China have an unresolved border conflict and competing regional hegemonic ambitions. Russia is under Western sanctions that would contaminate any currency it participated in creating. Brazil's inflation history creates credibility problems. And there is no BRICS equivalent of the European Central Bank, no BRICS equivalent of the Maastricht Treaty process, and no political will to create either.

Besides the significant challenge of establishing a shared currency among vastly diverse economies across four continents, Putin is also attempting to placate Trump, who has made it clear that any attempt to diminish the role of the dollar would be met with intense retaliation.

The external pressure from Washington reinforces the internal structural obstacles.

5.2 The Unit: The Realistic Alternative

What is operationally underway is more modest and potentially more durable than a common currency. On October 31, 2025, BRICS launched "The Unit," the first working prototype of a gold-anchored digital settlement system between BRICS economies, structured as 40% gold and 60% BRICS currency basket with equal 12% weightings of Brazil's Real, China's Yuan, India's Rupee, Russia's Ruble, and a fifth currency.

By December 2025, the Unit's value had adjusted to 0.9823 grams of gold per Unit, reflecting market-driven fluctuations in the reserve basket. The BRICS Unit was formally launched in 2026 after the October 31, 2025 pilot, with 100 Units initially supported by 40% gold and 60% BRICS currencies. In various key reserve levels, the BRICS Unit has exploited the collective gold reserves of member states of more than 6,000 tonnes.

The Unit is not a currency. This distinction is critical for analytical accuracy. The Unit is a settlement instrument, a payment mechanism used to conclude cross-border transactions and settle international trade. It is not a currency in the traditional sense of carrying cash or even a stablecoin with public access.

What the Unit accomplishes, if it scales, is the removal of the dollar from the accounting layer of BRICS wholesale trade. Two BRICS member sovereigns conducting a large bilateral transaction, an energy purchase, an infrastructure project, a commodity supply agreement, can price and settle that transaction in Units without either party needing to acquire, hold, or transfer dollars. The gold component provides a non-political anchor that neither party can manipulate.

The debate surrounding the Unit's design, purpose, and geopolitical implications has already reshaped conversations about de-dollarization, global power shifts, and the use of blockchain systems. Google Trends data shared by Bloomberg Opinion shows an unprecedented spike in searches for the term "dollar debasement" during the final quarter of 2025.

The Unit's blockchain-based architecture, built on the Cardano network, raises governance and sovereignty questions that have not been fully resolved. Who controls the gold collateral? How are exchange rate weightings updated? What is the dispute resolution mechanism? These are not trivial questions, and their resolution will determine whether the Unit remains a research pilot or scales into operational infrastructure.

5.3 Obstacles to the Unit's Scalability

The primary obstacles to the Unit achieving scale are not technical. They are political.

Trust Deficit. No BRICS member will accept a settlement system whose collateral custody is controlled by another member. China's dominance of CIPS, which processes the majority of existing BRICS+ non-dollar settlements, already creates discomfort in New Delhi and Brasília. Any gold-backed settlement instrument requires neutral, credible custody of the gold collateral, which in practice means a custodian that no single BRICS member controls. No such institution currently exists within the BRICS framework.

Capital Controls. The 60% currency basket component of the Unit includes currencies, specifically the yuan, rupee, and ruble, that are either not freely convertible or are subject to significant capital controls. A settlement instrument backed by assets that cannot be freely liquidated has an inherent liquidity discount that limits its adoption beyond bilateral BRICS-to-BRICS transactions.

Scalability from Pilot to Infrastructure. The initial Unit pilot issued only 100 Units. The journey from a 100-Unit research prototype to a wholesale settlement instrument capable of handling the volume of BRICS+ trade flows requires institutional infrastructure, legal frameworks, regulatory recognition in member jurisdictions, and governance structures that do not currently exist. This is a decade-long build, not a two-year deployment.

IMPACT ON THE US DOLLAR

6.1 Reserve Currency Share: Structural Erosion, Not Collapse

The US dollar accounts for 59% of global foreign exchange reserves as of 2024, a figure confirmed by the IMF. The dollar's share of global reserves has dropped from 58.2% in 2024 to around 56.9% in early 2026. This is not a rout. It is a persistent structural erosion from a 1970s peak of approximately 85%.

The correct analytical frame is not the level but the trajectory and the driver. The trajectory is down. The driver is not dollar weakness or loss of confidence in US credit per se, but deliberate, policy-driven diversification by an expanding coalition of central banks motivated by sanctions risk, Fed policy externalities, and domestic political considerations.

A trend has started toward diversification as a response to heightened US sovereign and credit risks on what used to be thought of as risk-free assets. The April 2025 episode of US "reciprocal tariffs" and the associated US Treasury market volatility, in which 10-year yields rose sharply despite equity market stress that would normally have triggered a flight to safety, was observed globally as evidence that the "risk-free" designation of US Treasuries is contingent, not permanent.

The euro has not filled the vacuum. While the euro has remained mostly a regional reserve currency, the US may retain its exorbitant privilege through the provision of US dollar-safe assets for longer. The beneficiaries of dollar reserve share loss have primarily been gold and a basket of smaller currencies: the Canadian dollar, Australian dollar, and Swiss franc. The yuan's reserve share remains below 3%.

6.2 SWIFT and the Payment Architecture

SWIFT's RMB tracker for June 2025 shows that the yuan only accounted for 3% of the share of currencies being used for global SWIFT payments, versus 48% for the US dollar and 24% for the euro.These figures systematically undercount yuan usage. The portion of RMB payments going directly through CIPS will not be captured in SWIFT data, giving rise to under-estimation of the RMB share in international payments. The actual yuan share of international payment value, including CIPS-routed transactions, is meaningfully higher than SWIFT data indicates. Our estimate, based on CIPS volume data and the proportion of transactions not using SWIFT messaging, is that the yuan's true share of international payment value is approximately 5-7%.

The dollar share of global trade finance was 84.1% in April 2024. This is the dollar's most entrenched position and will be the last to erode. Trade finance requires short-maturity, highly liquid instruments with universal counterparty acceptance. The yuan lacks capital account convertibility to provide this at scale. Dollar trade finance dominance will remain above 75% through the medium-term horizon.

6.3 US Treasury Demand: The Transmission Mechanism

The mechanism through which de-dollarization affects US Treasury markets is not dramatic. It is structural and cumulative.

Foreign central banks have historically been large, price-insensitive buyers of US Treasuries: they held reserves in dollar form not for yield but for liquidity and safety, making them indifferent to marginal changes in Treasury yields. The progressive reduction in foreign sovereign Treasury holdings removes this price-insensitive buyer from the marginal demand pool, shifting the burden to price-sensitive domestic buyers: money market funds, pension funds, insurance companies, and hedge funds, who require yield compensation and will not absorb duration at any price.

The consequence is a structural increase in term premium: the additional yield investors require to hold long-dated Treasuries relative to rolling short-dated bills. This term premium had been compressed toward zero during the era of QE and high foreign sovereign demand. As that era ends, term premium expansion is a structural feature of the US rates market, not a cyclical phenomenon.

The NDB raised $16.1 billion in 2024 in bond markets, at rates reflecting renewed market confidence in non-US-aligned development institution paper. The development of credible non-dollar sovereign and quasi-sovereign fixed income markets across the NDB, Asian Infrastructure Investment Bank, and bilateral development institutions creates additional competition for the global savings that previously flowed reflexively into US Treasuries.

6.4 Structural vs. Cyclical Decline: The Correct Analytical Question

The dollar's periodic strengthening in risk-off episodes, its dominance in global FX turnover (approximately 88% of international transactions by BIS data), and its continued use in the vast majority of global trade invoicing creates a narrative of dollar resilience that can mask the structural trend.

These are not contradictions. The dollar can strengthen in risk-off episodes and still be on a structural reserve share decline. Risk-off dollar demand reflects short-term safe-haven flows, not long-term reserve allocation decisions. The structural decline reflects the latter.

The dollar's fundamental advantages are real and durable: the US Treasury market is the world's largest and most liquid government bond market; US rule of law and property rights protections, while under pressure, remain the global benchmark; the dollar's network effects in financial intermediation are deep and self-reinforcing; and no existing alternative combines the depth, liquidity, and institutional credibility necessary to replace it.

The realistic endpoint, in our base case over a decade, is a dollar that commands 50-55% of global reserves and a declining share of trade settlement, while still functioning as the primary vehicle for global capital markets, international bond issuance, and emergency sovereign liquidity. That is not dollar collapse. It is dollar normalization: the reduction of an historically anomalous monopoly to a more historically typical, though still dominant, market share.

MARKET IMPLICATIONS

7.1 Gold: Structural Long, Sovereign Demand as Price Floor

The investment thesis for gold has not been stronger in the post-Bretton Woods era. The shift in central bank reserve behavior since 2022 represents a structural change in the gold demand function that is categorically different from previous cycles of central bank gold buying.

Previous episodes of central bank gold accumulation were driven by portfolio diversification or inflation hedging: they were responsive to market conditions and reversible when conditions changed. The current buying wave is driven by sanctions-proofing: the desire to hold assets that cannot be frozen, seized, or blocked regardless of geopolitical conditions. This demand is not price-sensitive. It is strategically motivated. A central bank buying gold to reduce sanctions exposure will not stop buying because the gold price has risen.

Gold prices surged to approximately $4,400 per ounce in late 2025. Gold hit $4,750 in late 2025 and has remained above fair value midpoints since. The Amundi Investment Institute projects that fair value will keep climbing through 2027, with the upper band approaching $5,800.

The Unit's gold collateral component adds a second institutional demand vector: gold is not merely a passive reserve asset but a functional component of the de-dollarization settlement architecture. As the Unit scales, it creates incremental gold demand that is directly tied to the volume of BRICS+ trade flows.

For portfolio construction: gold has a structural bid from sovereign buyers that will not reverse through a normal economic or monetary cycle. This implies a permanently higher floor price and supports aggressive overweighting relative to historical portfolio allocations.

7.2 Oil Pricing and Energy Market Structure

The petrodollar is eroding at the margin. The margin is growing.

China's exports surged 21.8% year-on-year in the first two months of 2026, providing the deep reservoir of yuan liquidity needed to finance large-scale oil purchases. As the world's largest oil importer, China has the purchasing power to mandate yuan settlement for a significant proportion of its purchases without offering a price discount: sellers must accept yuan terms or forgo the Chinese market.

Diana Choyleva, chief economist at Enodo Economics, stated: "The petrodollar's decline in the Gulf isn't a question of if, but when, and 'when' is coming faster than most realise."

The scenario that would materially accelerate oil de-dollarization is Saudi Arabia formalizing yuan pricing for Chinese purchases. The Saudi riyal is pegged to the dollar, which means Riyadh will likely avoid making drastic moves that could weaken the dollar, making it challenging to switch from dollar-denominated oil sales. But this structural constraint does not preclude partial yuan pricing for a subset of Chinese-bound barrels. The question is whether the security-for-currency bargain that has anchored Saudi-US relations since 1974 remains intact, and that question is becoming materially more uncertain.

But this structural constraint does not preclude partial yuan pricing for a subset of Chinese-bound barrels. The question is whether the security-for-currency bargain that has anchored Saudi-US relations since 1974 remains intact, and that question is becoming materially more uncertain.

7.3 US Treasuries: Duration Risk Underpriced

The structural case for higher US term premium is as follows. Foreign sovereign demand for Treasuries, historically the most price-insensitive component of the buyer base, is declining as central banks diversify into gold, non-dollar assets, and sovereign wealth fund allocations. The Federal Reserve's balance sheet normalization has reduced another large, price-insensitive buyer. The remaining marginal buyer is private sector domestic and international, and these buyers require yield compensation.

Our structural view is that 10-year Treasury term premium should trade in the 150-200 basis point range in the medium-term, up from near-zero in the QE era and the current 80-100 basis points. This implies 10-year yields that are persistently higher than the Fed funds rate forecast would suggest, and a steeper yield curve than most consensus forecasts embed.

7.4 Emerging Market Currencies

The expansion of bilateral local currency settlement creates differentiated effects across EM currencies.

Beneficiaries: The Indian rupee, UAE dirham, and Brazilian real are gaining genuine bilateral settlement roles that reduce their issuers' dependence on dollar liquidity for trade finance. This improved external position supports currency stability and reduces the sensitivity of these currencies to Fed policy cycles. Investors in Indian and Brazilian fixed income should model the improved monetary policy autonomy that reduced dollar settlement dependence provides.

Complicating Factor for the Ruble: Russia's deep integration with yuan settlement has created a dependency relationship in which the ruble's external value is increasingly tied to yuan-ruble exchange rates managed through bilateral channels rather than open market discovery. This is a stabilization mechanism under sanctions but creates valuation opacity that complicates any external investment thesis.

The Yuan: The yuan's status as the world's fifth-largest trading currency, with its global transaction share at 8.5%, is up 1.5 percentage points from 2022, the largest rise among all currencies. For portfolios with EM and commodity exposure, yuan-denominated fixed income instruments are becoming operationally relevant. By the end of 2024, overseas investors held around RMB 4.2 trillion in Chinese bonds, accounting for 2.7% of total Chinese bond market capitalization. This is a structurally growing market, albeit one with significant access and regulatory constraints.

7.5 Commodity Exporters: Structural Beneficiaries

Countries that export primary commodities and are willing to accept yuan, rupees, or rials in settlement are gaining genuine financial sovereignty. They can hold reserves in a wider range of currencies, finance infrastructure through the NDB without IMF conditionality, and participate in trade finance through CIPS at lower cost than dollar-based alternatives.

NDB membership is becoming a diplomatic instrument: accession and prospective-member status function as low-cost signals of alignment with a Global South financing bloc, while still allowing pivotal middle powers to hedge.

African and Southeast Asian commodity exporters are the marginal actors whose alignment with BRICS+ financial infrastructure will determine the trajectory of de-dollarization. If Nigeria, Malaysia, Kazakhstan, and Indonesia, all BRICS partner countries, progressively adopt non-dollar settlement for a portion of their commodity trade, the aggregate volume shift would be material.

RISKS TO DE-DOLLARIZATION

8.1 Capital Controls: The Binding Constraint on Yuan Hegemony

Capital account convertibility is a prerequisite for reserve currency status that cannot be finessed through bilateral settlement agreements or CBDC technology. Reserve currency holders must be able to freely invest their holdings in liquid, accessible capital markets. They must be able to repatriate capital without restriction. They must be able to use their holdings as collateral in international financial markets.

China's capital account remains substantially restricted. The PBOC manages exchange rate expectations through a daily fix mechanism. Capital outflows above threshold amounts require regulatory approval. Foreign access to onshore Chinese bond and equity markets, while expanded significantly since 2015, remains subject to quota and approval processes.

The motivation for maintaining these controls is rational: China's domestic financial system carries significant unresolved stress, including property sector liabilities, local government financing vehicle debt, and a banking system with non-performing loan ratios that official statistics understate. Full capital account opening under these conditions would risk capital flight that could destabilize the domestic financial system.

Until this structural tension is resolved, typically through a multi-year domestic financial sector cleanup and restructuring, the yuan cannot become a genuine reserve currency alternative. Our assessment is that this process is a 2030s event at best.

8.2 Internal BRICS Coherence: A Coalition of Divergent Interests

BRICS is playing a double game, and at this point, most analysts are not even pretending otherwise. The bloc pushes de-dollarization, builds gold reserves at a record pace, and talks up a multipolar financial order. At the same time, it softens declarations under tariff pressure, takes eleven days to respond when a member state is attacked, and lets bilateral interests win over bloc solidarity.

At the 2025 Rio Summit, BRICS playing a double game was on full display. The joint declaration carefully avoided naming the United States, even while referencing "serious concerns" about rising tariffs. India upgraded ties with Israel in the same period and also condemned Iran's retaliatory missile strikes on the UAE, which is also a BRICS member.

This is not a coalition capable of coordinating a sustained institutional challenge to the dollar system. It is a coalition capable of building bilateral infrastructure that collectively reduces dollar usage at the margin. Those are very different things, and the conflation of the two is the primary analytical error in most public commentary on this topic.

The governance of any shared BRICS financial institution will be a constant battleground between China's desire to lead and every other member's desire not to be led by China. India's consistent resistance to Chinese-dominated financial architecture within BRICS is not a diplomatic disagreement. It is a structural constraint on what BRICS can collectively accomplish.

8.3 Liquidity Infrastructure: The Dollar's Durable Network Advantage

The dollar's dominance in global financial markets reflects, in substantial part, network effects in liquidity provision. Global derivative markets, which serve as the primary risk management infrastructure for international trade and investment, are predominantly dollar-denominated. The FX swap market, through which central banks provide emergency dollar liquidity to their financial systems during stress, is dollar-centered. International bond markets, where the vast majority of sovereign and corporate external financing occurs, are dollar-denominated.

These network effects do not evaporate because bilateral trade settlement has shifted to local currencies. A Brazilian company that has shifted to yuan settlement for China-bound exports still needs to hedge dollar FX risk on its remaining export revenues, still accesses international capital markets in dollars, and still carries dollar-denominated debt that requires dollars to service.

BRICS countries still trade with America extensively. In 2024 country-specific terms, imports from the US ranked second highest for Brazil and China and fourth for India and South Africa. Meaning, major swaths of their economies rely on imported American goods, all of which require US dollars to buy. They also receive dollars when they export to America, which most BRICS do in droves. Thus, not even BRICS can abandon the dollar without significant, foundational economic changes that would take years.

8.4 US Geopolitical Deterrence

US President Donald Trump has explicitly opposed BRICS' financial independence efforts, warning that any attempt to bypass the dollar would lead to a 100% tariff on BRICS exports to the US.

This threat is not empty. The United States accounts for approximately 15% of world imports. Exclusion from the US market would impose material economic costs on BRICS members, most of whom maintain substantial export relationships with the United States. The threat has demonstrably influenced behavior: Putin has clearly abandoned the prospect of a BRICS common currency and is attempting to placate Trump in order to create space for sanctions relief.

The US also retains the ability to impose secondary sanctions on CIPS users: threatening foreign financial institutions that process transactions through CIPS with exclusion from dollar correspondent banking. This threat has limited adoption of CIPS among financial institutions in countries that wish to maintain dollar market access. It is the primary tool through which Washington can slow CIPS expansion beyond the current BRICS+ and sanctioned economy user base.

THE FIVE-TO-TEN YEAR OUTLOOK

9.1 Base Case: Gradual Structural Displacement (60% Probability)

De-dollarization continues as a slow, structural, bilateral process. No institutional rupture occurs in the dollar-based system. The Unit achieves operational status across three to five BRICS trade corridors by 2028 but does not achieve the scale to materially replace SWIFT for BRICS+ trade. CIPS grows to 3,000+ institutions but remains primarily a yuan payment system rather than a multi-currency alternative to SWIFT.

The dollar's reserve share declines toward 50-52% by 2033. The yuan's SWIFT share reaches 6-8%. China settles approximately 70% of its cross-border transactions in yuan. A quarter of China's oil imports are settled in yuan, with a smaller proportion of Gulf-to-China energy flows following suit.

US Treasury term premium expands to 150-200 basis points, supporting a steeper yield curve and persistently higher long-end yields than the rate cycle alone would imply. Gold remains structurally elevated, trading in the $4,500-$5,500 range over the forecast period as sovereign demand remains institutionally embedded. The petrodollar persists but is no longer unchallenged.

The key variable is Saudi Arabia. Base case assumes Saudi Arabia maintains dollar oil pricing for non-Chinese purchases while quietly expanding yuan settlement for China-bound barrels. Full petroyuan adoption by the kingdom would move the probability distribution materially toward the bull case.

9.2 Bull Case for De-Dollarization (20% Probability)

A major geopolitical shock, whether a US-China confrontation over Taiwan, a second large-scale sovereign reserve seizure, or a severe US fiscal crisis that triggers a sustained Treasury selloff, accelerates the flight from dollar assets.

Saudi Arabia formalizes yuan pricing for Chinese oil purchases. The Unit scales rapidly following a successful first operational year and attracts Global South adoption beyond BRICS+ core members. eCNY achieves cross-border deployment across 30+ BRI countries, creating a functional alternative payment network for an estimated 40% of global trade by volume.

Dollar reserve share falls toward 45% by 2033. Gold sustains above $5,500. The alternative settlement architecture achieves critical mass in South-South trade. BRICS+ partner countries, including Nigeria, Malaysia, Kazakhstan, Algeria, and Bolivia, collectively shift enough trade to non-dollar settlement that the aggregate volume shift begins to affect dollar demand at the macro level.

9.3 Bear Case: Dollar Dominance Sustained (20% Probability)

China's economy enters a prolonged deflationary cycle analogous to Japan's 1990s: property sector deleveraging becomes a decade-long drag, domestic financial stress constrains capital account liberalization, and yuan internationalization stalls as foreign investors reduce Chinese asset exposure.

US tariff threats against BRICS de-dollarization are implemented and sustained, imposing material economic costs on members who proceed with institutional anti-dollar initiatives. India defects from BRICS+ financial integration to preserve Western capital market access. The Unit fails to scale beyond pilot stage due to governance disputes over gold custody and currency weighting methodology.

The dollar's reserve share stabilizes above 58%. CIPS growth plateaus. Gold corrects from peak levels as fiscal stabilization in major economies reduces safe-haven premia. The alternative monetary architecture remains permanently sub-scale.

The bear case probability is not negligible. China's structural economic headwinds are real: the property sector deleveraging cycle is not complete, demographic contraction will weigh on growth for decades, and productivity deceleration without significant technological breakthrough limits the pace of economic development. A weaker China is a weaker de-dollarization campaign.

CONCLUSION

The Hawkmont Macro Thesis

The global monetary order is undergoing structural fragmentation that is irreversible in direction but indefinite in pace. The dollar will not be dethroned in any timeframe relevant to portfolio construction today. But the architecture being built around it is real, increasingly operational, and will compound its effects over the medium to long term in ways that are not fully priced into current asset valuations.

The BRICS de-dollarization campaign is best understood not as a frontal assault on dollar supremacy but as the construction of a parallel financial system for a specific subset of global trade and finance: South-South commodity flows, BRICS bilateral settlements, sanctioned economy transactions, and BRI-linked infrastructure financing. This parallel system will handle a growing but still minority share of global transactions. It does not need to replace the dollar system to impose meaningful costs on dollar dominance.

The three investable conclusions are specific and time-bound.

Gold is structurally long for a duration that transcends the normal commodity cycle. The buyer base has changed. Sovereign demand, motivated by sanctions-proofing and reserve diversification, is institutionally embedded and price-insensitive. The Unit's gold collateral requirement adds a second demand vector. Central bank buying above 1,000 tonnes annually is the new baseline, and it creates a floor that private sector selling cannot easily breach.

US Treasury duration is structurally mispriced. The term premium compression of the QE era reflected a buyer base, Federal Reserve and foreign sovereign, that is both retreating. The marginal buyer is now private sector and price-sensitive, requiring yield compensation. A structurally wider term premium is not a crisis scenario. It is a normalization toward historical norms that current pricing does not embed.

The yuan will not become a reserve currency in the forecast horizon. But it will become the dominant settlement currency for a material portion of global trade, and institutional investors who treat it as irrelevant to portfolio construction are making a category error. The infrastructure being built across CIPS, eCNY, mBridge, and bilateral settlement frameworks will, within a decade, create a genuine alternative settlement architecture for South-South and BRICS-adjacent trade that reduces the dollar's structural necessity in those corridors.

The dollar's exorbitant privilege is not ending. It is normalizing. That process will be slow, non-linear, and punctuated by episodes of dollar strength that create false impressions of permanence. It will also be structural, directional, and consequential for the pricing of every asset class in which dollar dominance is currently treated as a fixed parameter.

Investors who model that parameter as variable will be better positioned for the decade ahead.

Hawkmont Research | Global Macro Strategy This report is produced for institutional distribution only. Not for redistribution or public release. The views expressed represent the independent analysis of Hawkmont Research analysts. All data is sourced from publicly available institutional sources including IMF COFER database, SWIFT RMB Tracker, World Gold Council, PBOC disclosures, BIS triennial survey, NDB annual reports, and BRICS summit official documentation. This document does not constitute investment advice and should not be relied upon as the basis for any investment decision.