On August 12, 2025, in São Paulo, President Luiz Inácio Lula da Silva announced an ambitious proposal to create a common currency for the BRICS, a bloc comprising Brazil, Russia, India, China, South Africa, and new members such as Egypt, Iran, United Arab Emirates, Saudi Arabia, and Ethiopia. The initiative aims to reduce dependence on the U.S. dollar in trade among member countries, at a time when the dollar’s exchange rate fell to R$ 5.3870, the lowest since June 2024. The statement, made during an interview, underscores the need to strengthen the bloc’s economic integration and address global financial system asymmetries. The proposal, set to be discussed at the 2025 BRICS summit under Brazil’s presidency, reignites the debate on de-dollarization but faces internal and external resistance, including threats of up to 10% tariffs on BRICS products by U.S. President Donald Trump. The goal is to promote transactions in local currencies, inspired by bilateral agreements like the 2004 deal between Brazil and Argentina.
The proposal is not isolated. It reflects a growing movement within the bloc to reduce the dollar’s influence, which still dominates about 90% of global transactions. Lula emphasized that the BRICS currency does not aim to replace the dollar globally but to facilitate intra-bloc trade, cutting transaction costs and currency vulnerabilities. Tensions with the United States, fueled by Trump’s statements, shape the geopolitical context of the initiative.
- Economic motivation: Reduce transaction costs and dollar dependency.
- Geopolitical context: U.S. sanctions on Russia and China drive de-dollarization.
- Brazilian leadership: Brazil leads BRICS in 2025, focusing on financial integration.
Origin and evolution of the proposal
The idea of a BRICS common currency gained traction in 2023 when Lula questioned the dollar’s hegemony during a visit to the BRICS Development Bank (NDB) in Shanghai. He asked, “Who decided the dollar would be the standard for trade?” The proposal was reinforced at the 2024 Kazan summit in Russia, where President Vladimir Putin presented a concept for a currency called “Unit,” backed by gold and member countries’ currencies. Brazil, taking the bloc’s presidency in 2025, plans to advance technical discussions, with an initial timeline projecting a prototype by 2026.
The Brazilian proposal draws inspiration from agreements like the 2004 deal with Argentina, which allowed transactions in reais and pesos, reducing the need for dollar conversion. However, analysts note that creating a common currency requires years of planning and macroeconomic convergence among member countries. Lula’s leadership is seen as an effort to position Brazil as a mediator in a global landscape of increasing financial fragmentation.
International reactions to Brazil’s plan
Lula’s proposal sparked mixed reactions among BRICS members and globally. Leaders like Chinese President Xi Jinping and Indian Prime Minister Narendra Modi expressed cautious support but demanded detailed technical studies. Russia, facing economic sanctions since 2022, sees de-dollarization as a way to bypass U.S. financial restrictions. India, with tight control over its monetary policy, is hesitant to cede sovereignty for a shared currency.
Trump’s threats escalated the debate. In posts on Truth Social, he labeled BRICS “anti-American” and vowed tariffs of up to 10% on bloc products if they proceed with de-dollarization. Economists warn that such tariffs could raise inflation in the U.S. and disrupt global trade but also pose a significant hurdle for the BRICS proposal.
- Russian support: Moscow sees the currency as a way to evade sanctions.
- Indian caution: New Delhi fears losing monetary control.
- U.S. reaction: Trump threatens tariffs to protect dollar dominance.
- Chinese interest: Beijing aims to boost the yuan in global trade.
Technical challenges for the BRICS currency
Creating a common currency faces complex barriers. Financial integration among BRICS countries, with economies as diverse as China’s (the world’s second-largest) and Ethiopia’s (in economic crisis), requires a unified banking system and clear issuance rules. Geopolitical rivalries, such as those between China and India, hinder the mutual trust essential for a shared currency’s success.
The BRICS Development Bank, led by former Brazilian President Dilma Rousseff, plays a central role in the debate. The NDB already funds projects in local currencies like the real and yuan to reduce transaction costs. However, the lack of economic convergence among members and reliance on dollar reserves (80% of Brazil’s international reserves, for example) limit the feasibility of a radical shift in the short term.
- Financial integration: Need for a common central bank.
- Geopolitical rivalries: Tensions between China and India complicate agreements.
- Economic stability: Crises in countries like Egypt and Ethiopia undermine confidence.
- Governance complexity: Defining the currency’s backing and control is a key obstacle.
Alternatives to dollar dependence
Beyond a common currency, BRICS explores other ways to reduce dollar reliance. Bilateral agreements, like the 2023 Brazil-China deal to use reais and yuan in trade, are already yielding results. China negotiates oil deals in yuan with Saudi Arabia, while India seeks rupee-based agreements with the UAE. These efforts reflect a global trend of diversifying currency reserves, with 20% of oil trade in 2023 conducted in alternative currencies.
The NDB also plays a strategic role, funding infrastructure and sustainability projects in local currencies. The real’s 3.7% appreciation against the dollar in 2025 strengthens Brazil’s position in the debate, but the dollar’s dominance in global trade, particularly in oil markets, remains a significant challenge.
Brazil’s leadership in BRICS 2025
With the BRICS presidency in 2025, Brazil aims to solidify its role as a global mediator. Lula stressed that the BRICS currency is a step toward a “multipolar world” with fewer economic asymmetries. The 2025 Rio de Janeiro summit will discuss not only de-dollarization but also issues like hunger, climate change, and taxing large fortunes. Brazil plans to engage new members like Saudi Arabia and the UAE to expand the bloc’s influence, which represents 39% of global GDP and 48.5% of the world’s population.
However, tensions with the U.S., fueled by Trump’s threats, pose risks. Lula ruled out direct negotiations with the U.S. president but vowed to retaliate through the World Trade Organization (WTO). Brazil’s leadership will be tested in a polarized geopolitical landscape, where the proposal’s success hinges on diplomatic skill and intra-bloc consensus.
- Brazilian agenda: Strengthen the NDB and promote a multipolar world.
- New members: Saudi Arabia and Egypt could boost BRICS influence.
- U.S. tensions: Trump’s tariffs challenge de-dollarization efforts.
- Next steps: The 2025 summit will shape the currency’s future.
Global economic context and proposal impact
The dollar’s drop to R$ 5.3870, coupled with the real’s appreciation, creates a favorable environment for the de-dollarization debate. Economists note that the dollar’s decline may encourage other countries to support Lula’s proposal, but the U.S. currency’s global dominance remains strong. In 2022, the dollar was used in 88% of global transactions, according to the Bank for International Settlements (BIS), while the yuan accounted for just 7%.
The BRICS proposal reflects a broader trend of financial fragmentation, driven by U.S. sanctions on countries like Russia and Iran. However, creating a common currency requires overcoming internal divisions and external pressures, particularly from the U.S. Lula’s leadership will be crucial in balancing the bloc’s interests and avoiding an escalation of trade tensions.
- Dollar dominance: 88% of global transactions still use the U.S. currency.
- Financial fragmentation: Sanctions drive the search for alternatives.
- Real’s appreciation: 3.7% rise strengthens Brazil’s position.
- External risks: U.S. tariffs could limit BRICS progress.