For decades, the United States dollar has been more than just paper and ink it has been the backbone of the global economic order. From oil transactions to international loans, from the vaults of central banks to the pockets of ordinary citizens, the dollar has reigned supreme. But in recent years, a new challenger has emerged: BRICS and its vision of a common currency to bypass the dollar. While this battle is far from open warfare, it is a silent and strategic conflict with consequences that could reshape the balance of global power.
The Historical Rise of the Dollar:
The roots of the dollar’s dominance stretch back to the aftermath of World War II. In 1944, the Bretton Woods Agreement tied global currencies to the US dollar, which was itself backed by gold at a fixed rate of $35 per ounce. This arrangement gave the world a stable system, and countries began storing dollars as reserves, confident that they could be converted into gold at any time.
Behind this promise, vast amounts of gold from Europe were stored deep in vaults in Manhattan, guarded by a 90-ton steel door. This gold transfer was not just a financial decision—it was also a political one. War-ravaged nations trusted America’s stability and believed that their wealth would be safer there than anywhere else.
The system worked smoothly for a time, but by the 1960s, America’s costly Vietnam War and expanding deficits led to a dangerous imbalance more dollars existed than there was gold to back them. When countries like France began demanding their gold back, the United States faced a serious dilemma. In 1971, President Richard Nixon made a historic decision: he cut the dollar’s link to gold, turning it into a fiat currency. The “Nixon Shock” permanently transformed the global economy, giving the US the power to print money without gold reserves but also planting the seeds for future debt crises.
The Petrodollar Lifeline:
After severing the gold standard, America faced the risk that its currency could lose value and relevance. Without gold backing,
why would other nations hold dollars?
The answer came in 1974, through a groundbreaking deal with Saudi Arabia: all global oil sales would be conducted in US dollars. This “petrodollar” system created an unbreakable demand for dollars because any nation needing oil had to hold them in reserve.
Other OPEC members quickly followed suit, and soon, energy and dollar dominance became inseparable. This meant that even countries hostile to the United States had to store dollars if they wanted to buy oil or gas. The arrangement also brought political and military benefits for Saudi Arabia, which received US security guarantees and military equipment in return.
For decades, this system kept the dollar strong even without gold backing. Countries held billions in dollar reserves, not only for oil but also for general trade, making the US currency the world’s unquestioned financial king. It also allowed America to run large deficits without fear of a currency collapse, something no other nation could do.
The BRICS Challenge:
Fast forward to the 21st century, and the world is shifting toward a multipolar order. The BRICS group—Brazil, Russia, India, China, and South Africa has emerged as a coalition of rising economies eager to reduce dependency on the dollar. In 2015, they established the New Development Bank (NDB) to fund projects in local currencies rather than solely in dollars. Though the majority of loans are still dollar-based, the shift is symbolic: BRICS wants an alternative payment system that bypasses the US-led order.
Calls for a common BRICS currency grew louder after 2022, especially from leaders like Brazil’s President Lula da Silva, who argued for a new system of trade settlement. The idea is simple in theory: if BRICS countries trade with each other in a shared currency, they can avoid the dollar entirely, protecting themselves from exchange rate risks and US sanctions.
However, internal differences, political, economic, and strategic, have slowed real progress. India and China, for example, are both part of BRICS but are also geopolitical rivals. Coordinating monetary policy across such diverse economies is a monumental task. Even so, the idea of a currency that could rival the dollar is no longer a fringe discussion; it is now part of the global conversation.
Cracks in the Dollar’s Armor:
The dollar’s dominance rests on four pillars: the size of the US economy, its role as the primary reserve currency, the fiat currency system’s global acceptance, and the petrodollar arrangement. While these pillars remain intact, they are showing signs of stress.
First, the global shift toward renewable energy threatens the petrodollar. As nations reduce oil and gas imports, their need to hold dollars will decline. Countries investing heavily in green technologies may choose to hold reserves in other currencies or commodities like gold.
Second, America’s national debt—now exceeding $34 trillion—undermines confidence in its fiscal stability. In 1971, the debt stood at less than $400 billion. Today, it is over 125% of US GDP, a staggering increase of more than 9,000%. Without the ability to borrow cheaply, the US would face hard choices between domestic spending and maintaining its global military presence.
Third, the “weaponization” of the dollar through sanctions has made many countries wary of keeping assets in US-controlled systems. When the United States and its allies froze $300 billion of Russia’s reserves in 2022, it sent a clear signal: the dollar could be used as a geopolitical tool. This has accelerated efforts by countries like China, Russia, and even Saudi Arabia to diversify their reserves.
Why BRICS Still Has Limits:
Despite the momentum toward de-dollarization, BRICS faces major obstacles. Creating a shared currency requires deep political trust, unified monetary policies, and integrated financial systems—things BRICS does not yet have. The euro is a cautionary example: even among closely integrated European economies, managing a shared currency has been challenging.
Moreover, the US economy still accounts for 22% of global trade, and the dollar makes up 58% of world foreign exchange reserves, far ahead of the euro at 20% and the yuan at just 6%. Even China, the largest BRICS member, conducts over half a trillion dollars in trade with the United States, mostly settled in dollars. In other words, the economic links to the dollar are too strong to be cut overnight.
The Silent Battle Ahead:
The contest between the dollar and BRICS currencies is less about sudden collapse and more about gradual shifts. Over the past decades, the dollar’s share in global trade has declined from over 70% to around 54%, with the euro and yuan gaining ground. If this trend continues, the dollar’s supremacy could erode—not through a dramatic crash, but through slow, steady diversification.
For the United States, the real danger lies not in BRICS alone but in its own actions. Internal political instability, reckless debt accumulation, and overuse of financial sanctions could weaken the trust of allies and partners. History shows that empires usually fall from within before being overtaken from without. The Roman Empire, the British Empire, and others all declined because internal weaknesses left them vulnerable to external challengers.
Conclusion:
The dollar is not about to disappear, but its golden age may be ending. BRICS does not yet have the power to dethrone it, but it is planting seeds for a more multipolar financial system. The “silent battle” will be fought not in open economic war but in boardrooms, trade agreements, and quiet shifts in reserve policies. If the United States wants to keep its currency at the heart of global finance, it must not only rely on history and legacy it must adapt to a world where the dollar is no longer the only game in town.
The coming decades will determine whether the dollar remains the undisputed king or becomes just one of several competing global currencies. For now, the United States holds the advantage but the game has already begun, and BRICS is quietly preparing for the long match ahead.
FAQS:
1. Why has the US dollar dominated global trade for decades?
The dollar’s dominance began after World War II with the Bretton Woods Agreement, which tied global currencies to the US dollar, then backed by gold. Later, the 1974 petrodollar deal with Saudi Arabia ensured global oil sales were conducted in dollars, creating lasting international demand.
2. What is the BRICS currency proposal?
BRICS, Brazil, Russia, India, China, and South Africa have discussed creating a shared currency to facilitate trade among its members without using the dollar. This aims to reduce dependency on the US-led financial system and avoid exposure to sanctions and exchange rate risks.
3. What challenges does BRICS face in launching a common currency?
Key obstacles include political differences, economic diversity, a lack of unified monetary policy, and limited integration of financial systems. Even closely integrated economies like the EU have struggled to manage a shared currency, making it even harder for BRICS.
4. What factors are weakening the dollar’s global dominance?
Rising US national debt, the shift toward renewable energy reducing oil-based dollar demand, and the use of sanctions to freeze assets, such as the $300 billion in Russian reserves in 2022, have made some countries diversify away from the dollar.
5. Will the BRICS currency replace the dollar soon?
Unlikely in the short term. The dollar still accounts for 58% of global reserves and underpins 22% of world trade. While BRICS initiatives may slowly erode its dominance, the shift will be gradual rather than a sudden replacement.