Dependence on the US Dollar: Why BRICS Wants to Break Free from This Currency Dominance

The BRICS alliance is taking significant steps to reduce their economic dependence on the U.S. dollar. This move is not just about diversification but also about protecting the revenues and financial efficiency of member countries from unseen yet harmful costs.

Hidden Costs and Financial Losses in a Dollar-Based System

When international trade relies on the U.S. dollar, every transaction involves currency conversion processes that are never free. According to experts from NS3.AI, these conversion costs create a continuous loss of value for countries that do not have the dollar as their domestic currency. In addition to administrative fees, BRICS countries also lose control over their own monetary policies, as dollar fluctuations can unpredictably impact local economies. This system has long favored the United States while burdening smaller and developing economies.

BRICS Strategy: Local Currency Exchange as an Alternative Solution

The strategy being developed by BRICS is to promote direct currency exchanges between member countries. By conducting trade transactions using rupiah, ruble, rupee, yuan, or rand—without the need for conversion to dollars first—these countries can save significant costs and retain more revenue for their domestic development. This approach also reduces vulnerability to dollar value fluctuations and U.S. economic policies that are sometimes misaligned with the interests of developing nations.

Long-Term Vision: A More Balanced International Monetary System

The ultimate goal of BRICS’s efforts is to build a more decentralized and fair global monetary architecture. Instead of relying on a single dominant currency, their vision is to create a system where various currencies play a balanced role in international trade. This will reduce structural dependence on the U.S. dollar and open opportunities for countries to manage their economies more independently. In the long run, this movement could transform how the world conducts cross-border business.