BRICS+ De-Dollarization: 2026 Assessment of Multipolar Reserve Shift

The BRICS+ bloc, now encompassing ten member states including Indonesia which joined in early 2025, has entered a critical phase in its long-standing push to reduce reliance on the U.S. dollar. By early 2026, the pace of bilateral trade settlements in non-dollar currencies has accelerated markedly, with several major emerging economies actively settling oil and commodity trades outside the dollar system. The BRICS bridge payment platform, known as BRICS Pay, is approaching its pilot stage, marking a shift from theoretical debate to operational reality. This article provides a strategic assessment of whether the dollar's reserve status faces a genuine structural challenge or remains insulated by network effects and institutional trust.

Context: The Expanding BRICS+ Bloc

BRICS, originally an acronym coined by economist Jim O'Neill in 2001, has evolved from a four-nation investment concept into a formal intergovernmental organization. The founding members — Brazil, Russia, India, and China — held their first summit in 2009, with South Africa joining in 2010. The bloc expanded significantly in 2024, admitting Iran, Egypt, Ethiopia, and the United Arab Emirates. Indonesia became the first Southeast Asian member in early 2025. Collectively, BRICS+ now represents more than a quarter of the global economy and nearly half the world's population. The BRICS+ expansion 2025 has amplified the bloc's geopolitical weight and its capacity to challenge dollar hegemony.

The Kazan Declaration of October 2024 formally recognized the benefits of cross-border payment instruments to minimize trade barriers and promote the use of local currencies in financial transactions. However, it stopped short of committing to a unified BRICS currency, reflecting the diverse economic interests and political priorities of member states.

Bilateral Trade Settlements in Non-Dollar Currencies

By 2026, the most tangible progress in de-dollarization has occurred in bilateral trade. China and Russia now conduct over 70% of their bilateral trade in yuan and ruble, according to estimates from the Bank for International Settlements data. India has begun settling a portion of its oil imports from the UAE in rupees and dirhams. Brazil and China have established a clearing arrangement that allows direct yuan-real conversion, bypassing the dollar.

These arrangements are facilitated by central bank swap lines and bilateral payment agreements. The People's Bank of China has signed swap agreements with over 40 countries, providing yuan liquidity for trade settlement. The BRICS Contingent Reserve Arrangement, a $100 billion pool of foreign exchange reserves, serves as a backstop for members facing balance-of-payments crises, reducing the need to hold dollar reserves.

Oil and Commodity Trade: The Critical Test

The oil market remains the linchpin of dollar dominance. Historically, oil has been priced and traded almost exclusively in dollars. However, in 2025 and early 2026, several BRICS+ members have taken steps to diversify. Saudi Arabia, while not a BRICS member, has signaled willingness to accept yuan for oil sales to China. Russia and Iran, both under Western sanctions, have shifted a significant portion of their oil exports to yuan and other non-dollar currencies. The UAE has conducted some crude sales in dirhams. If the petrodollar system continues to erode, the dollar's reserve status could face a genuine structural challenge.

The BRICS Pay System: Approaching Pilot Stage

BRICS Pay, a decentralized payment messaging mechanism, is the bloc's flagship initiative for reducing reliance on the SWIFT network and dollar-based clearing. Developed by the BRICS Business Council and launched in 2018, the system features a decentralized cross-border messaging system (DCMS) built by scientists at Saint Petersburg State University. DCMS operates without a central hub, with participants managing their own nodes, making it resistant to external interference. It can process up to 20,000 messages per second and is planned to become open source after the pilot phase.

In October 2024, China fully backed BRICS Pay, providing a significant boost. Russia, under sanctions since its invasion of Ukraine, has been the strongest proponent, viewing the system as a way to bypass SWIFT. Iran, also under sanctions, sees it as a top national priority. Brazil's President Luiz Inácio Lula da Silva has supported the mechanism, stating that 'the multipolar order we aim for is reflected in the international financial system' and suggesting a BRICS currency.

By early 2026, BRICS Pay is approaching a pilot stage involving a subset of member states. The system aims to enable real-time local currency settlements, reducing transaction costs and settlement times. However, challenges remain, including technical interoperability with existing national payment systems, regulatory harmonization, and the need for sufficient liquidity in non-dollar currencies.

Strategic Responses from the U.S. Federal Reserve and Treasury

The United States has not remained passive. The Federal Reserve and Treasury have taken several steps to reinforce the dollar's position. The Fed has expanded its network of central bank swap lines, providing dollar liquidity to key partners. The Treasury has worked to modernize the U.S. payment infrastructure, including the FedNow service for instant payments, which could enhance the dollar's attractiveness for cross-border transactions.

More significantly, U.S. policymakers have signaled a willingness to use sanctions and export controls to penalize countries that actively circumvent the dollar. The threat of secondary sanctions has deterred some nations from fully embracing de-dollarization. However, the overuse of sanctions has also fueled the very trend the U.S. seeks to counter, as countries seek to reduce their vulnerability to financial coercion.

Assessing the Dollar's Reserve Status: Structural Challenge or Insulated Dominance?

The dollar remains the world's dominant reserve currency, accounting for approximately 58% of allocated foreign exchange reserves as of late 2025, according to IMF COFER data. This is down from over 70% in 2000, but still far ahead of the euro (20%), yen (5.5%), and yuan (2.5%). The dollar's share in foreign-exchange turnover remains above 88%, and it is used in roughly half of all cross-border trade invoicing outside Europe.

The dollar's resilience is underpinned by powerful network effects: the depth and liquidity of U.S. financial markets, the rule of law, the independence of the Federal Reserve, and the institutional trust built over decades. The US dollar network effects create a self-reinforcing cycle that is difficult to break. Even as BRICS+ advances alternative systems, the dollar's incumbency advantage remains formidable.

However, the trend is unmistakable. The dollar's share of reserves is declining gradually, and the pace of de-dollarization in trade settlement is accelerating. The BRICS+ bloc now has the economic mass and political will to sustain its efforts. If the BRICS Pay system proves operational and scalable, it could provide a viable alternative for a significant portion of global trade.

Expert Perspectives

Economists remain divided. Some, like Jim O'Neill, the originator of the BRIC concept, have called the grouping a failed project, arguing that it serves no real purpose beyond symbolic gestures. Others point to the tangible progress in local currency settlements and payment infrastructure as evidence of a genuine shift. The multipolar reserve system debate continues to evolve as more data becomes available.

FAQ

What is BRICS+?

BRICS+ is an intergovernmental organization comprising Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, the United Arab Emirates, and Indonesia. The '+' refers to the expanded membership since 2024.

What is de-dollarization?

De-dollarization refers to efforts by countries to reduce their reliance on the U.S. dollar for international trade, reserves, and financial transactions, often by using local currencies or alternative payment systems.

What is BRICS Pay?

BRICS Pay is a decentralized payment messaging system designed to facilitate cross-border transactions in local currencies, reducing dependence on SWIFT and the dollar.

Is the U.S. dollar losing its reserve status?

The dollar's share of global reserves has declined from over 70% in 2000 to about 58% in 2025, but it remains dominant. The trend is gradual, and the dollar benefits from deep financial markets and institutional trust.

How does the U.S. respond to de-dollarization?

The U.S. has expanded swap lines, modernized payment infrastructure, and used sanctions to deter de-dollarization. However, overuse of sanctions may accelerate the trend.

Conclusion: A Critical Inflection Point

2026 marks a critical inflection point for de-dollarization. The BRICS+ bloc has moved from rhetoric to action, with bilateral trade settlements in non-dollar currencies becoming routine for some members. The BRICS Pay system, if successfully piloted, could provide a scalable alternative to dollar-based clearing. However, the dollar's incumbency advantages — network effects, market depth, and institutional trust — remain powerful. The outcome will depend on the operational success of BRICS Pay, the continued expansion of local currency trade, and the strategic responses from Washington. For now, the dollar faces a genuine but gradual structural challenge, not an imminent collapse.

Sources

• Wikipedia: BRICS, BRICS Pay, Dedollarisation
• IMF COFER data on currency composition of official foreign exchange reserves
• Kazan Declaration, October 2024
• Statements by BRICS leaders and central bank officials