As geopolitical rifts deepen and supply chains splinter, the BRICS bloc is moving from a loose coalition of emerging economies to a more assertive platform seeking to rewrite parts of the global economic playbook. With an expanded roster in 2024 that brings in major energy and regional powers from the Middle East and Africa-including the United Arab Emirates, Egypt, Ethiopia and Iran-BRICS now represents a larger share of global output, trade and commodities, and a louder voice for the so‑called Global South. Argentina declined an earlier invitation, while Saudi Arabia, also invited, continues talks on terms of accession.
Behind the bigger tent is a sharper agenda: more trade settled in local currencies, new payment rails that reduce reliance on the U.S. dollar, and a beefed‑up role for the New Development Bank in infrastructure and climate finance. The bloc’s push is already being felt in energy markets, cross‑border finance and development lending, even as internal divergences-from India‑China tensions to sanctions on Russia and Iran-test its cohesion. This article examines how an enlarged BRICS is positioning itself to reshape rules and norms across commodities, capital and technology-and what that could mean for policymakers, investors and multinationals navigating a fragmenting global economy.
Table of Contents
- BRICS expansion accelerates a shift in global trade and finance as local currency settlements challenge dollar dominance
- Energy partnerships digital payment networks and the New Development Bank reshape capital flows and infrastructure across the Global South
- Governments and investors should now diversify reserves beyond the dollar build local currency payment rails and realign supply chains to BRICS standards
- The Conclusion
BRICS expansion accelerates a shift in global trade and finance as local currency settlements challenge dollar dominance
With the admission of energy heavyweights and strategic trade gateways such as Saudi Arabia, the United Arab Emirates, Iran, Egypt, and Ethiopia, the bloc’s enlarged footprint is testing the central role of the greenback in cross-border commerce, as governments and firms expand local-currency settlements, deepen central bank swap lines, route payments via alternative systems such as CIPS, and pilot CBDC rails to clear oil, metals, and manufactured goods in yuan, dirhams, rupees and other regional units; the shift promises lower FX costs and less sanctions exposure for participants, but also introduces fragmentation risks, thinner offshore liquidity, and new hedging needs that global banks, the New Development Bank, and regional lenders are racing to address as invoice currencies diversify and trade financing terms are rewritten.
- Market impact: More commodity contracts explored in non-dollar terms; wider use of regional benchmarks and clearinghouses.
- Financing flows: NDB scales local-currency bond issuance; export credit agencies price facilities beyond the dollar.
- FX dynamics: Higher demand for swap/liquidity lines in RMB, AED, INR; basis spreads and hedging costs in focus.
- Compliance/sanctions: Diversified payment corridors reduce single-point exposure but complicate oversight.
- Winners/losers: Traders with multi-currency ops and treasury tech gain; smaller importers face execution and risk-management hurdles.
Energy partnerships digital payment networks and the New Development Bank reshape capital flows and infrastructure across the Global South
BRICS members are accelerating a reconfiguration of cross-border finance as state-backed energy partnerships link resource security with infrastructure build-outs, digital payment networks speed up local-currency trade and remittances, and the New Development Bank (NDB) scales blended finance and guarantees; together, these channels are lowering transaction costs, reducing dollar dependence, and redirecting capital toward ports, rail, grids, and renewables across the Global South, even as governance, debt sustainability, and sanctions risks remain under close scrutiny.
- Energy partnerships: joint upstream/downstream ventures, long-term offtake contracts, grid interconnectors, and regional gas/hydrogen hubs focus capex on underserved corridors.
- Digital payment networks: instant, QR-enabled, ISO 20022-aligned rails enable local-currency settlement via links between RTGS and fast-payment systems, cutting fees and settlement times.
- NDB tools: local-currency loans, credit guarantees, and project-preparation facilities crowd in private investors through blended finance and green bond issuance.
- Risk buffers: bilateral swap lines, pooled reserves, and alternative messaging systems cushion liquidity shocks and expand trade finance capacity.
- On-the-ground impact: lower cost of capital for climate infrastructure, faster project delivery, and deeper South-South supply chains from energy to logistics.
Governments and investors should now diversify reserves beyond the dollar build local currency payment rails and realign supply chains to BRICS standards
Amid rising South-South trade and efforts to reduce single-currency risk, policymakers and asset managers are moving to reweight reserve portfolios, expand domestic settlement infrastructure, and anchor procurement to emerging technical benchmarks set by BRICS institutions and partners, with implementation already visible in RMB clearing arrangements, ISO 20022 migrations, and cross-border instant-pay pilots.
- Diversify reserve composition – Increase allocations to BRICS currencies, gold, and SDR-linked assets; add local-currency sovereigns and New Development Bank paper to deepen liquidity and reduce dollar funding dependence.
- Build local-currency rails – Roll out ISO 20022-native systems; interconnect with CIPS/SPFS and instant-payment networks; expand FX swap lines and CLS alternatives; pilot wholesale CBDC corridors for trade finance and energy settlements.
- Realign supply chains – Map critical inputs to BRICS conformity and security standards; relocate processing capacity to BRICS-aligned zones; denominate long-term offtake contracts in local units; develop regional commodity pricing hubs.
- Risk management – Establish onshore derivatives for hedging local-currency exposure; refine collateral frameworks for multi-currency repos; stress-test exposure to dollar liquidity squeezes and secondary sanctions.
- Governance and data – Harmonize KYC/AML under FATF-compliant regimes; deploy open APIs for invoicing and tax reconciliation; standardize disclosure on FX intervention and reserve composition to anchor market confidence.
The Conclusion
As BRICS expands its membership and deepens cooperation, its capacity to convert rhetoric into executable policy will determine whether it becomes a durable counterweight within the global economy or remains a loose coalition of convenience. The bloc’s push for greater use of local currencies, the build-out of payment infrastructure, and the scaling of the New Development Bank point to an ambition to rewire parts of trade and finance. Yet divergent national interests, uneven growth trajectories, and governance hurdles could complicate delivery.
For markets and policymakers, the signals to watch are tangible: settlement patterns in cross-border trade, the share of development finance intermediated outside traditional channels, progress on commodity pricing benchmarks, and the terms of any future enlargement. How BRICS manages internal heterogeneity while offering credible alternatives-not just criticism-to existing institutions will shape its impact on capital flows, supply chains, and rule-setting. In a volatile global landscape, the bloc’s next steps may help define not only who grows, but also who writes the rules of growth.