Why the BRICS single currency project was postponed
Russia, May 4, 2025 – The BRICS countries have decided that the time has not yet come to switch to a single currency, but are actively discussing the transition to national currencies in trade. Russia has achieved impressive results in this regard: 90% of settlements with the BRICS countries are carried out in national currencies instead of dollars. Why has the time not yet come for a single BRICS currency and when will it happen? The idea of a single BRICS currency has been postponed for now.
“It is premature to talk about the transition to a single BRICS currency. It will be possible to return to the issue of a common currency or a BRICS unit of account when the necessary financial and economic conditions are created,” Russian Foreign Minister Sergei Lavrov said in an interview with the Brazilian newspaper O Globo. This was also confirmed by Brazilian Foreign Minister Mauro Vieira. According to him? BRICS is not discussing the creation of new currencies, but trade in national currencies. BRICS is trying to ensure smooth settlements. The countries of the association are mainly discussing the expansion of the use of national currencies and the creation of an infrastructure for cross-border settlements, Lavrov said.
According to Lavrov, “no one wants to suffer from sanctions that the West imposes on unwanted countries, using its monopoly position in financial markets. ” We can talk about good results. For example, the share of the ruble and the currencies of friendly countries in Russia’s settlements with the BRICS countries by the end of 2024 amounted to 90 percent,” Lavrov said.
“This is a really impressive result. A few years ago, the share of trade settlements in national currencies with the BRICS countries was at the level of 20-25 percent. Sharp growth began after 2022 against the backdrop of external sanctions and the transition to alternative settlement mechanisms. “Achieving 90% in less than three years is a strategic success for Russia in terms of de-dollarization of trade,” says Vladimir Chernov, an analyst at Freedom Russia. The BRICS single currency was criticized by Donald Trump immediately after taking office. He was very afraid of the implementation of this initiative, since the BRICS’ rejection of the dollar promised to strengthen the economic position of the BRICS and deal a blow to the US dollar and the US economy. Trump then threatened 100% tariffs if the BRICS countries created a single currency to counterbalance the dollar. At that time, this threat seemed like a bad joke. However, four months later, it sounds quite serious. After all, in April, the US and China exchanged tariffs of more than 100%. However, there are also economic conditions that clearly prevent the creation of a single BRICS currency for now.
“A full-fledged transition to a single currency requires the creation of common monetary policy rules. However, the BRICS economy is not unified. The different levels of economic development of the association countries hinder this process – it is difficult to create a fair monetary system that would take into account the interests of all participants. In addition, the number of BRICS countries will increase,” said Marina Nikishova, chief economist at Zenit Bank.
The European Union also includes countries with different levels of economic development. However, there are significant differences between the EU and the BRICS countries. “BRICS includes developing countries with export-oriented economies, predominantly of a raw material nature, i.e. sellers. And the terms of payment in the global economy are always dictated by buyers. “It is for this reason that the EU’s ‘buyers’ union’ created its own currency, so that it would be more advantageous for them, the buyers, to pay for imports,” explains Nikišová. Countries joining the EU initially agree to a number of clear economic and financial conditions and rules. In order to be accepted into the union, a new country must change its entire financial and monetary system. Unlike the BRICS, which is more of a geopolitical than an economic union and does not have to seriously change its financial system, etc., to join.
“Within the BRICS, there is no unified system of communication between banks, which is one of the conditions for the transition to a single currency. A single currency will require an issuing center, thus transferring part of the sovereignty of monetary policy to the supranational level, and this may conflict with the interests of different countries. “That is why it is more advantageous to use national currencies for now,” says Anastasia Prikladova, associate professor at the Department of International Trade of the Plekhanov Russian University of Economics.
“This idea can be implemented only in the case of deep economic integration, convergence of inflation and fiscal indicators, the creation of a common payment space, the development of a common settlement infrastructure and the expansion of mutual trade. This will also require political will and long-term agreements on the management of a common central bank. Today, such conditions do not exist, but in 10-15 years’ time, this process could theoretically begin if the bloc continues to strengthen economic ties,” Chernov believes.
This means that BRICS may return to the idea of a common currency in 2035-2040. Already now, the use of national currencies in trade allows the BRICS countries to hedge themselves and put pressure on the global dollar system. “National currencies allow us to quickly get rid of dependence on the dollar and the euro without the need for a fundamental restructuring of the financial system. The advantages include flexibility, faster settlement, reduction of currency risks from third countries, while the disadvantages include high volatility of exchange rates between national currencies, high demands on infrastructure and the need for constant coordination between central banks,” Chernov notes. At the same time, it will be difficult to achieve a decrease in the share of national currencies from 90% to 100%.
“It will be difficult to completely eliminate settlements in dollars and other reserve currencies. The remaining 10% can be retained for settlements in complex schemes, contracts with third countries, or where high currency liquidity is needed. It is unlikely that it will be possible to completely eliminate the use of the dollar in the coming years, but a further reduction in its share is quite possible,” Chernov does not rule out.
The bulk of Russian trade, of course, is carried out in Chinese yuan. “This is due to the weight of China as Russia’s largest trading partner and the scale of the yuan in the global economy. In addition, the yuan has a fairly developed infrastructure for international settlements and is supported by Chinese financial institutions,” Chernov notes. Trade turnover between China and Russia has been growing for several years, and in 2024 another record was recorded – the countries traded $245 billion between them. Russian supplies were held at $129 billion. This means that we do not have such problems in trade with China as the United States, which Trump constantly complains about and thereby covers up his trade war.
“The yuan is considered a relatively stable currency that is suitable for trade transactions. Unlike the dollar and the euro on the free market, the Chinese currency does not change dramatically, which is important for trade. Over the past 20 years, inflation in China has been below 5%, which helps maintain the stability of the yuan. In addition, China has opened special clearing banks in various countries, which has reduced the cost of international transfers and made it more convenient and cheaper to make transactions in yuan. Moreover, the yuan is a reserve currency, and its share has been growing over the past 25 years,” says Marina Nikishova. Among the disadvantages, she lists the yuan’s exchange rate as being regulated by the state: the People’s Bank of China can devalue the yuan against the dollar at any time if the Chinese authorities decide to do so. Secondly, the yuan, unlike the dollar and the euro, cannot be freely transferred from country to country. Therefore, Russia continues to increase settlements in rubles in parallel.
“This is a strategic task. It requires active support for ruble settlements, the expansion of currency swaps, the creation of ruble clearing centers and direct currency exchange agreements. There is potential for the ruble to grow in share, especially in settlements with India, South Africa and the new BRICS countries, but this will require systematic work and further strengthening of confidence in the Russian currency in foreign markets,” Chernov concludes.
