In 2001, Jim O’Neill, an economist at Goldman Sachs, coined the term “BRIC.” It was a catchy acronym for Brazil, Russia, India, and China, and it quickly took its place in the global economy. These countries were seen as rising powers that could shake things up. And it didn’t take long for BRIC to gain traction. By 2010, South Africa had joined the club, turning BRIC into BRICS, with one clear goal: to represent emerging economies and counterbalance Western power.

But ambition is one thing, reality another. The BRICS journey has been fraught with obstacles, with only China growing rapidly, while others, like Brazil and South Africa, have struggled. Internal strife has also often stalled progress, making BRICS more about discussion than any real action.

But things have changed recently. At the latest BRICS summit in Kazan, Russia, it was announced that countries like Iran, the UAE, Ethiopia, and Egypt are now participating. The BRICS reaffirmed their commitment to changing global power dynamics in the comprehensive 32-page Kazan Declaration. With 36 countries represented at the meeting, their intentions were clear – the BRICS were no longer just a coalition; they were becoming a force.

So what’s their plan, you might ask?

To reduce the dominance of the US dollar. As you know, the dollar has long been the main currency in trade, especially oil, and has given the US significant power. Until recently, almost all oil transactions were conducted in dollars. But now, with the participation of oil exporters such as Saudi Arabia, Iran and the UAE, the BRICS are scrambling for alternatives. Even by 2023, around 20% of oil trade will be conducted in non-dollar currencies. And they are taking further steps to break away from the dollar’s ​​shadow.

For starters, they have established the New Development Bank (NDB). Think of it as the BRICS’ answer to the World Bank or the IMF (International Monetary Fund); these institutions are often seen as driven by Western interests. When these banks lend money, it usually comes with conditions or terms that may not always help a country grow.

But the NDB is different. It offers loans to developing countries without the strings attached by the West. It also encourages lending in local currencies rather than dollars, with the expectation that 30% of its loans could soon be in non-dollar currencies. This could mean that countries could start trading oil in yuan or rupees, a move that could shake up the petrodollar system, a pillar of US influence. In fact, Saudi Arabia has already hinted that it could accept yuan for oil.

But trading in non-dollar currencies alone is not enough. For this to really work, the BRICS need a messaging system that helps move money between member countries. Consider a system like SWIFT (Society for Worldwide Interbank Financial Telecommunication) that securely processes requests for interbank money transfers. The problem is that the BRICS countries do not want to be too dependent on SWIFT because SWIFT is controlled by the West or the G-10 countries such as the US, Canada, Europe and Japan. The central banks in these countries can remove a country from the SWIFT system at any time.

Remember how Russia was banned from SWIFT and how difficult it was to trade with others? That’s why Russia proposed creating a BRICS payment messaging system to easily swap resources without relying entirely on SWIFT or the dollar.

But the BRICS’ de-dollarization goals go beyond using alternative currencies. They even have some old-school ideas like trading via a barter system! Yep, you heard that right.

If you’re wondering why, here’s the thing. The BRICS aren’t just a counter to Western dominance; they also unite countries rich in natural resources. For example, Russia is a natural gas and metals powerhouse, China dominates the rare earths market, and Brazil is a leading exporter of agricultural products like soybeans.

As the BRICS gain momentum, their collective economic weight is also gaining ground. Together, they account for about 35% of the global economy, with China alone contributing nearly half of that. They also represent 45% of the world’s population, with China and India accounting for three-quarters of that. This growing influence is prompting the BRICS countries to propose direct swaps of agricultural commodities, allowing them to escape the dollar and evade Western sanctions. In fact, there are rumours that a Russian firm recently traded 20,000 tonnes of chickpeas to Pakistan in exchange for the same amount of rice.

While Pakistan is not yet a part of BRICS, it is clear that such workarounds have boosted the group’s confidence. That is probably why they are exploring the idea of ​​a potential gold-backed currency called “UNIT” as an alternative to the US dollar.

Their logic is simple. Many central banks are turning to gold as a safety net against a possible decline in the dollar. Countries within the BRICS are hoarding gold at record levels to protect themselves from volatility. So if BRICS countries continue to increase their gold reserves, demand for gold could increase, pushing prices higher and bringing BRICS closer to their goal of de-dollarization. Such expansion could lead to significant economic and geopolitical changes. This is because countries like the US have long enjoyed low inflation due to cheap imports from China.

This has made things affordable for American consumers. But as BRICS countries, including China and Russia, rethink how they use their resources, deciding to stop selling cheap goods or trading in alternative currencies could also lead to price increases in the US and elsewhere. As import costs rise, supply chains are disrupted, and countries adjust to new trade norms, we could see higher inflation. So, it’s not just about rising prices. It’s about a shift in the global economy, and it could be bumpy for a while.

Countries that are developing under the current Western-dominated system may rethink their alliances, as aligning with the BRICS could mean cheaper resources and better trade deals. But moving away from the West comes with its own risks, especially for countries that are dependent on Western technology and investment.

However, moving away from the US dollar won’t be a cakewalk. It remains the most widely accepted currency globally and plays a major role in oil markets. Also, let’s not forget that most of our foreign exchange reserves are held in dollars, and the US has the deepest, most flexible financial markets.

On top of that, ongoing tensions between the two largest countries in the BRICS, India and China, could make meaningful progress difficult. So yes, we will have to wait and see if the world is ready for this new era, or the world may never emerge from the mess as the balance of power shifts once again.