I remember first reading about BRICS years ago and thinking it was mostly symbolic—an economic club whose statements made headlines but rarely changed the plumbing of global finance. Lately, however, talk about a BRICS+ common currency has shifted from rhetoric to substantive discussion among policymakers and analysts. It's tempting to imagine a new global currency emerging from the Global South that challenges the dollar's dominance. At the same time, the practical realities—macroeconomic convergence, legal frameworks, payment systems, and political trust—are daunting. In this article I’ll walk you through the history, economic mechanics, and policy trade-offs behind a BRICS+ currency idea and explain why viability depends on decisions beyond pure economics.
Background and Rationale: Why BRICS+ Members Consider a Common Currency
The idea of a BRICS+ common currency springs from several intersecting motivations: reducing dependence on the US dollar for trade and reserves; lowering transaction costs among member countries; asserting greater strategic economic autonomy; and promoting regional or South-South economic integration. Across the BRICS and potential BRICS+ members, recurrent concerns about “weaponized finance” and sanctions have catalyzed interest in alternatives to dollar-denominated settlement systems. But motivations alone don’t create a currency. A functional common currency requires deep institutional structures—independent monetary policy, fiscal coordination rules, payment and settlement infrastructure, and legal harmonization. When leaders talk about a common currency, they are often signaling political intent; implementing it would require decades of trust-building and substantial policy alignment.
Historically, successful currency unions have one or more of the following preconditions: strong trade integration among prospective members; similar inflation and growth trajectories; established fiscal transfer mechanisms to cushion asymmetric shocks; and political willingness to cede monetary sovereignty to a supranational authority. The eurozone is the most prominent modern example, but it also shows the pitfalls: without fully integrated fiscal policy and robust banking union mechanisms, the euro has faced existential stress during crises. BRICS+ is more diverse than the eurozone in language, legal tradition, institutional maturity, macroeconomic behavior, and political objectives. Brazil, Russia, India, China, South Africa, and any additional members present a highly heterogenous economic landscape. Trade linkages among BRICS are significant but still limited relative to intra-European trade; many BRICS countries have larger trade volumes with non-BRICS partners. That affects the liquidity and usability of any common currency created primarily for internal BRICS settlement.
Another clear rationale is reserve diversification. Several emerging economies have been increasing reserves held in currencies other than the dollar—like the euro, yuan, or gold—to reduce exposure to exchange-rate or sanction risks. A BRICS+ currency meant to function as a regional reserve asset could, in theory, reduce the need for dollar reserves. But for central banks worldwide to adopt a new currency as reserve, they require depth, liquidity, and perceived stability. That’s a high bar: reserve currencies evolve over time through extensive use in invoicing, borrowing, and as safe assets. The BRICS+ bloc would need to create deep, liquid sovereign or supranational debt instruments denominated in the common currency to make it attractive for reserves.
Finally, technological advances—digital currencies and modern payment rails—make a BRICS+ currency more feasible in operational terms than it would have been previously. A shared digital currency or interoperable central bank digital currency (CBDC) frameworks could reduce costs and bypass legacy correspondent banking frictions. Yet technology cannot substitute for macroeconomic alignment, trust in institutions, and the rule of law—all prerequisites for users to accept and hold value in a new currency.
Political and strategic motives drive discussion, but the real litmus test for any new currency is economic credibility. Without credible institutions, even technologically advanced currencies struggle to achieve widespread acceptance.
Economic Viability: Macroeconomic Conditions, Reserve Needs, and Liquidity
Assessing economic viability requires dissecting several technical but interlinked dimensions: macroeconomic convergence, monetary policy credibility, financial market depth, trade invoicing patterns, and network effects. Let’s unpack them one by one with an emphasis on what would realistically make a BRICS+ currency function as a medium of exchange, store of value, and unit of account.
Macroeconomic convergence matters because a common currency eliminates exchange-rate flexibility among members. Countries facing asymmetric shocks traditionally use currency devaluation to regain competitiveness; within a currency union, adjustment occurs through internal devaluation (wages, prices) or fiscal transfers. For BRICS+, the heterogeneity in inflation histories, productivity growth, and fiscal stances implies that binding themselves to a single currency would require hard fiscal rules and possibly transfer mechanisms to handle divergences. Without them, some members would experience recurrent balance-of-payments stress and competitiveness pressures. In addition, credibility is essential: if the central authority that issues the common currency is perceived as politically compromised or inflationary, the currency will not be accepted as a reliable store of value. Inflation differentials across BRICS economies also complicate common monetary policy: a policy rate appropriate for one member may be destabilizing for another.
Liquidity and market depth are the second challenge. A functioning currency must be widely accepted in trade invoicing and must be backed by deep financial markets—government bonds, repo markets, derivatives—that allow market participants to hedge risk and price assets. The U.S. dollar and euro benefit from enormous depth in sovereign and corporate bond markets, which supports liquidity and price discovery. For BRICS+ to replicate that, the bloc would need to issue large volumes of safe assets denominated in the new currency. That implies a supranational treasury or coordinated sovereign issuance strategy plus clear legal structures guaranteeing creditworthiness. Absent that, private and public actors will hesitate to hold large balances in the new currency.
The network effect is critical and self-reinforcing. Currencies become dominant because others use them—trade invoicing, cross-border lending, and reserve holdings create reinforcing demand. A new BRICS+ currency would need to overcome inertia: the global financial system and many firms are deeply embedded in dollar-based contracts and payment systems. Incentivizing the shift would require substantial policy tools: preferential pricing for trade invoiced in the new currency, subsidies or guarantees for issuers of BRICS+ currency-denominated instruments, and technical solutions that lower transaction costs between members. Central banks could agree to liquidity swap lines or standing repo facilities in the new currency to build confidence, but these are costly and require coordinated rules and capital.
Reserve diversification is often cited as a key benefit. However, central banks hold reserves not by ideological preference but because they need safe, liquid assets to defend exchange rates or provide emergency liquidity. For the BRICS+ currency to become part of global reserves, it needs convertible assets with reliable redemption mechanics. That again leads back to credible supranational fiscal discipline and transparent monetary policy frameworks. Moreover, if members retain significant amounts of foreign-currency debt (often in dollars), the transition costs from re-denominating liabilities or creating currency mismatch buffers can be prohibitive in the short term.
Illustrative comparison
| Dimension | BRICS+ Reality |
|---|---|
| Trade Integration | Growing but less dense than eurozone; many bilateral ties outside BRICS |
| Macroeconomic Convergence | Divergent inflation, fiscal and growth profiles across members |
| Financial Market Depth | Varies widely; would need supranational instruments to build depth |
In short, economic viability is not a single binary outcome but a conditional one: with deep institutional design, credible fiscal and monetary rules, and active policymaker coordination, a BRICS+ currency could gradually gain relevance—particularly for intra-BRICS trade. But expecting immediate reserve status or rapid displacement of the dollar is unrealistic. Instead, a phased approach—starting with payment system interoperability, bilateral invoicing agreements, and common digital settlement rails—offers a practical route to test acceptance and build liquidity over time.
Operational, Legal, and Geopolitical Challenges
Moving from a concept to an operational currency involves many often-overlooked steps: legal treaties to establish the issuing authority, cross-border banking rules for settlement and custody, dispute resolution frameworks, and cyber-resilience for payment infrastructure. Each of these layers presents distinct challenges and opportunities, and combined they create a high barrier to quick implementation.
Legally, a currency requires enforceable rights—contracts, creditor protections, and dispute resolution mechanisms—that market participants trust. The euro benefitted from EU treaties, the European Court of Justice, and decades of legal harmonization that created a predictable cross-border legal environment. BRICS+ members operate under very different legal traditions—common law, civil law, and mixed systems—making the harmonization of financial statutes and creditor protections both politically sensitive and technically demanding. A supranational court or arbitration mechanism with binding authority would likely be necessary, and creating it would require members to cede significant aspects of sovereignty—something that is often politically contentious.
Operationally, payment and settlement infrastructure must be resilient and interoperable. Many BRICS members use national payment systems, and correspondent banking links remain critical for cross-border flows with non-BRICS partners. To reduce dependence on external rails, BRICS+ would need a robust central settlement platform or interoperable CBDCs. While distributed ledger technology can facilitate cross-border messaging and settlement, large-value payments demand ultra-low latency, strict privacy controls, and proven security. Establishing certified custodians for reserve assets denominated in the BRICS+ currency, building market-making capabilities for the secondary markets, and designing mechanisms for emergency liquidity—all these operational aspects are resource-intensive.
Geopolitics shapes feasibility strongly. A common currency implicitly signals economic alignment and may be perceived by external actors as an attempt to undermine existing systems. That can trigger countermeasures—financial, diplomatic, or trade-related—that alter the cost-benefit calculus for prospective members. Political trust among BRICS+ members is uneven; strategic rivalry or bilateral tensions could hamper necessary cooperation when crises hit. Moreover, external investors and private banks assess political risk dynamically; uncertainty about the bloc’s cohesion could discourage market-making and asset holdings in the new currency.
Sanctions risk is a double-edged sword: while some members pursue a common currency to reduce sanction vulnerability, the mere creation of such a currency might accelerate sanction design aimed at isolating it. Additionally, multinational corporations with global operations often prefer stable, widely accepted currencies to denominate contracts and loans. Unless the BRICS+ currency is broadly convertible and supported by large liquid markets, multinational usage will remain muted.
Building a common currency without clear legal and operational platforms risks fragmentation, arbitrage, and loss of confidence—outcomes that can deepen economic damage rather than mitigate it.
Cybersecurity and financial stability frameworks are non-negotiable. Any cross-border payment rail can be targeted; ensuring continuity of service requires extensive cooperation on monitoring, incident response, and shared contingency plans. Furthermore, central banks will require harmonized frameworks for bank supervision and resolution so that financial crises in one member do not cascade uncontrollably. Creating such frameworks means difficult trade-offs: how much national discretion do individual regulators retain versus what authority does a BRICS+ supervisory body hold? These are political decisions with profound economic consequences.
Paths Forward: Practical Models, Phased Approaches, and Policy Recommendations
A pragmatic path toward a BRICS+ currency would be incremental rather than revolutionary. Below I outline realistic models and policy steps that can build credibility, liquidity, and utility over time while managing risk.
1) Interoperable payment systems and CBDC linkages. Start by enabling seamless settlement for cross-border transactions through interoperable CBDCs or a shared clearing system. This is lower risk and can deliver immediate transaction-cost reductions for intra-BRICS trade. It also creates operational experience and builds trust without forcing immediate monetary union. Pilot programs, standardized messaging formats, and shared cyber-resilience protocols should be prioritized.
2) Bilateral and plurilateral invoicing agreements. Encourage public and private sector actors to invoice bilateral trade in local currencies or in a BRICS+ settlement unit. Offer temporary incentives—such as reduced bank fees or targeted liquidity facilities—to build early usage. This can begin to create a payment network effect and test whether market participants find the settlement currency convenient and stable.
3) Supranational issuer and reserve instruments. To bootstrap reserve demand and provide safe assets, consider issuing supranational bonds denominated in the BRICS+ settlement unit. These instruments must be backed by credible revenue streams and a transparent governance framework. Establishing a BRICS+ development bank with lending and issuance capacity could help—but it must be designed to avoid moral hazard and maintain credit credibility through strong fiscal rules and independent audits.
4) Gradual legal harmonization and dispute resolution. Create phased legal integration starting with financial market rules, cross-border insolvency protocols, and arbitration mechanisms for currency-denominated contracts. Rather than immediate full legal harmonization, target priority areas that enable cross-border capital flows and investor protections to build confidence.
5) Contingency and transition frameworks. Design clear protocols for transition phases, including swap lines, emergency liquidity facilities, and temporary capital controls if necessary. Transparency about these mechanisms reduces market panic risk and provides predictable support during stress episodes.
Policy recommendations include: prioritize operational interoperability over immediate monetary union; sequence steps so that market depth and legal frameworks precede large-scale currency issuance; build supranational instruments gradually while maintaining stringent governance standards; and engage with external partners to reduce the risk of countermeasures that can destabilize adoption.
Quick checklist for policymakers
- Assess macroeconomic convergence metrics and design fiscal buffers for asymmetric shocks.
- Pilot interoperable CBDC links or a shared settlement platform.
- Create a supranational issuance vehicle with strict governance to build safe-asset supply.
- Negotiate phased legal frameworks and investor protection regimes.
- Develop contingency liquidity lines and communication protocols to manage crises.
For readers who want to learn more about global reserve frameworks and practical implementation of cross-border payment systems, reliable sources include the International Monetary Fund and the World Bank, which provide research and policy guidance on reserve currencies, payment infrastructures, and monetary cooperation.
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Summary: What to Expect and How to Watch This Space
To summarize succinctly: a BRICS+ common currency is conceptually feasible but practically challenging. Its success would hinge on phased implementation, credible supranational institutions, legal harmonization, sufficient market depth, and geopolitical stability. In the short to medium term, expect incremental moves—interoperable payment systems, bilateral trade settlement in local currencies, and pilot digital currency initiatives—rather than an overnight replacement of the dollar. For the long term, if BRICS+ members can design governance that fosters credibility and liquidity while managing political risks, a new settlement currency could emerge as an important complement to the dollar and euro, especially for intra-BRICS trade.
My recommendation if you’re tracking this as an investor, policymaker, or corporate treasurer is to focus on signals: concrete legal agreements, issuance of supranational instruments, central bank swap lines, and operational pilots for CBDC interoperability. Those are tangible milestones that indicate whether the idea is moving beyond rhetoric to implementation. And remember: currencies gain dominance slowly, driven by network effects and deep markets—not by high-profile announcements alone.
If you'd like a concise briefing tailored to your organization—covering implications for trade invoicing, reserve strategy, or payment operations—consider reaching out via the resources above and following central bank publications. Questions or perspectives? Leave a comment below and I’ll respond with practical insights.