Emerging economies within the BRICS group are unlikely to build financial markets large enough to challenge the dominance of the U.S. dollar over the next decade, according to Nilton David, Director of Monetary Policy at Brazil’s central bank.
Speaking during a central bank webcast, David emphasized that BRICS currently lacks a significant stockpile of assets denominated in local currencies that could rival the global influence of the dollar. While he acknowledged that alternative settlement mechanisms could help facilitate bilateral trade, he said such tools remain far from capable of displacing the greenback in the foreseeable future.
Earlier this year, Reuters reported that Brazil, which holds the BRICS presidency in 2024, plans to sideline discussions of a shared currency. Instead, the focus will be on reducing dollar dependence through initiatives like payment system integration and exploration of blockchain frameworks established by institutions such as the Bank for International Settlements.
Founded in 2009 and later expanded to include South Africa, BRICS has recently welcomed Egypt, Ethiopia, Indonesia, Iran, and the UAE—strengthening its position as a potential geopolitical and economic counterweight to Western influence.
David also addressed the role of digital assets, describing Bitcoin as “a speculative currency by nature.” He noted that Brazil’s $340 billion in foreign-exchange reserves remains heavily dollar-weighted, given that the vast majority of external transactions are settled in U.S. currency.
While the central bank aims to maintain the liquidity and depth of Brazil’s forex market, David acknowledged that these features come with challenges. The Brazilian real tends to correlate with global risk assets, making it more volatile and frequently used by short-term investors, which can cause sharp fluctuations in demand.
