BRICS Local-Currency Trade Hits 67%: Multipolar Shift Reshaping Global Finance

In a decisive milestone for the global financial order, BRICS+ nations now conduct approximately 67% of intra-bloc trade in local currencies, up from under 20% a decade ago, while the US dollar's share of global foreign exchange reserves has fallen to 56.3% — its lowest level since 1995. This strategic analysis, drawing on IMF COFER data, central bank reports, and payment system statistics, examines how the weaponization of financial sanctions, China's Cross-Border Interbank Payment System (CIPS) expansion, Saudi Arabia's yuan-priced oil exports, and three consecutive years of 1,000+ tonne central bank gold purchases are collectively reordering the architecture of global trade and reserve currency systems.

Context: The De-Dollarization Tipping Point

The shift toward a multipolar reserve system has accelerated dramatically since February 2022, when Western nations froze approximately $300 billion in Russian central bank reserves held abroad. "The freezing of Russian reserves was a watershed moment," notes a senior economist at the Atlantic Council. "It demonstrated that the dollar-based system could be weaponized, prompting central banks worldwide to diversify." The BRICS de-dollarization push has since gained institutional momentum, with the bloc's 11 full members now representing over 40% of global GDP (PPP) and 48.5% of the world's population, according to 2026 data.

The dollar's reserve share has declined roughly 15 percentage points from its 2000 peak of 71%, with the latest IMF COFER data for Q4 2025 showing 56.8% — a 31-year low. However, analysts caution that exchange rate valuation effects account for a significant portion of the apparent decline. The DXY index fell over 10% in the first half of 2026 alone, the largest drop since 1973, inflating the dollar value of non-dollar reserves.

Infrastructure: CIPS and mBridge Powering the Shift

CIPS: China's SWIFT Alternative

China's Cross-Border Interbank Payment System (CIPS) has emerged as the operational backbone of de-dollarization. As of early 2026, CIPS connects 1,597 indirect participants and 194 direct participants across 117 countries, processing an annual business volume of 180 trillion yuan (approximately $25 trillion). The system operates 5x24h+4h with 99.999% availability, offering a viable alternative to SWIFT for yuan-denominated trade settlement. The CIPS expansion into new markets has been particularly pronounced in Asia, Africa, and the Middle East, where BRICS+ members increasingly bypass dollar intermediaries.

mBridge: CBDC Settlement at Scale

Project mBridge, a China-backed wholesale central bank digital currency (CBDC) platform, has processed $55.49 billion across 4,047 transactions as of November 2025 — a 2,500-fold surge from its 2022 pilot phase. The digital yuan (e-CNY) accounts for over 95% of settlement volume. Current participants include the People's Bank of China, Hong Kong Monetary Authority, Bank of Thailand, and the central banks of the UAE and Saudi Arabia. In a landmark transaction, the UAE's Ministry of Finance and Dubai's Department of Finance executed a public sector payment using the wholesale digital dirham. The Bank for International Settlements (BIS) transferred governance to participating central banks in October 2024, marking a geopolitical split in banking infrastructure as Western central banks pivoted to Project Agorá.

Energy and Gold: The Petrodollar Erosion

Saudi Arabia's Yuan-Priced Oil

The petrodollar system — a 1974 agreement ensuring oil was sold exclusively in US dollars — has been quietly eroding. Saudi Arabia did not formally renew its commitment in 2024, and yuan-priced crude exports to China have risen to an estimated 22% of Saudi oil sales. China is now Saudi Arabia's largest oil customer, supported by a $7 billion currency swap agreement signed in 2023. The petrodollar system decline has accelerated amid geopolitical turmoil, with reports that ships passing through the Strait of Hormuz during the Iran conflict were granted passage by paying in yuan.

Central Bank Gold Purchases

Central banks have purchased over 1,000 tonnes of gold annually for three consecutive years (2022–2024), with 2025 adding 863 tonnes — still well above the 2010–2021 average of 473 tonnes. Major buyers include China (2,200+ tonnes total reserves), Russia (2,300+ tonnes), Poland (550 tonnes), and India. The National Bank of Poland was the largest buyer in 2025, adding 102 tonnes. Unreported buying represented 57% of the annual total, suggesting sovereign accumulation is even higher than official figures show. With gold near $4,733 per ounce, central banks absorb nearly a third of annual mine production.

Impact: A Multipolar or Fragmented Order?

The shift toward local-currency trade and reserve diversification carries profound implications. BRICS+ nations now account for 44% of global GDP when including partner countries, and their growth rates (3.7% average in 2026) outpace the G7 (1.2%) by more than threefold. The New Development Bank has approved over $32 billion in loans across 96 projects since 2016, financing infrastructure in local currencies.

However, the dollar remains dominant in key metrics: it still settles 88% of global foreign exchange transactions and accounts for the majority of trade invoicing outside the BRICS+ bloc. The multipolar reserve currency outlook is further complicated by internal divisions within BRICS. Russia, facing Western sanctions, has been the strongest proponent of de-dollarization, conducting 90–95% of its bilateral trade with China and India in national currencies. Yet a 2026 Kremlin memo reportedly explores a return to dollar settlement as part of a potential US-Russia economic partnership, which could threaten BRICS momentum.

Expert Perspectives

"We are witnessing the most significant transformation of the international monetary system since the collapse of Bretton Woods," says Dr. Eswar Prasad, professor of trade policy at Cornell University. "But the transition will be gradual and uneven. The dollar's network effects, deep capital markets, and institutional credibility will sustain its primacy for years to come."

Economist Barry Eichengreen of UC Berkeley cautions: "The world is not heading toward a single alternative reserve currency but toward a more fragmented system where the dollar shares the stage with the euro, renminbi, and gold. This could reduce the efficiency gains from a single global currency but may prove more resilient."

FAQ

What is the current share of BRICS local-currency trade?

As of early 2026, approximately 67% of intra-BRICS+ trade is conducted in local currencies, up from under 20% a decade ago.

Why is the US dollar's reserve share declining?

The dollar's share of global foreign exchange reserves fell to 56.3% in 2026, driven by central bank diversification into non-traditional currencies, gold, and the weaponization of financial sanctions (notably the freezing of Russia's $300 billion in reserves).

What is CIPS and how does it challenge SWIFT?

The Cross-Border Interbank Payment System (CIPS) is China's alternative to SWIFT, connecting over 1,500 institutions across 117 countries and processing $25 trillion annually. It enables direct yuan settlement, reducing reliance on dollar intermediaries.

How much gold have central banks purchased recently?

Central banks purchased over 1,000 tonnes annually from 2022 to 2024, with 863 tonnes in 2025. Major buyers include China, Russia, Poland, and India, as nations seek sanctions-proof reserves.

Is the petrodollar system ending?

The petrodollar system is eroding, with Saudi Arabia not renewing its 1974 dollar-only oil deal in 2024 and yuan-priced crude exports rising to ~22% of Saudi sales to China. However, the dollar remains dominant in global energy markets.

Conclusion: The Road Ahead

The data suggests the world is heading toward a genuinely multipolar reserve regime, though the transition will span decades. The dollar's share could fall to 50% within five years at the current pace, according to Wolf Street analysis, but it would remain the largest single reserve currency. The key variable is whether the shift remains orderly — with the dollar, euro, renminbi, and gold coexisting — or descends into a disorderly fragmentation that raises borrowing costs for all nations. For now, the BRICS+ local-currency trade milestone and mBridge's operational success confirm that the multipolar shift is no longer theoretical: it is happening at scale.

Sources

• IMF COFER Database, Q4 2025 and Q2 2026
• Reuters, "China-led cross-border digital currency platform sees surge," January 2026
• PYMNTS, "Project mBridge processed $55.49B," 2026
• World Gold Council, Gold Demand Trends Full Year 2025
• CIPS Co., Ltd., Participant Data, 2026
• Fortune, "What is the petrodollar?" April 2026
• Wolf Street, "Status of US dollar as global reserve currency," March 2026
• Brookings Institution, "Status of Russia's frozen sovereign assets," 2025