The expanded BRICS bloc—now encompassing Brazil, Russia, India, China, South Africa, Saudi Arabia, Iran, Egypt, Ethiopia, and the United Arab Emirates—has taken its most concrete step yet to reduce dependency on the US dollar. At its annual meeting in Cape Town in late June 2026, the New Development Bank (NDB) announced it would lend $15 billion over the next two years entirely in the local currencies of its member nations (NDB Annual Meeting Communiqué, June 2026). This marks a pivotal escalation in the BRICS de‑dollarization strategy, moving from rhetoric to real balance‑sheet activity. The loans will finance renewable energy projects in South African rand, water infrastructure in Indian rupees, and digital connectivity in Brazilian reais, completely bypassing the US dollar.

The Local Currency Lending Bloc: How It Works

Historically, development finance from multilateral institutions—even the NDB itself—was overwhelmingly denominated in dollars. This exposed borrowers to exchange‑rate risk: if a borrower’s domestic currency depreciated against the dollar, the cost of servicing the loan could balloon, often triggering debt distress. The NDB’s new policy flips that model. By lending in renminbi, rand, reais, and rupees, the Bank aligns the currency of debt with the currency of revenue. For a South African solar plant that earns revenue in rand, a rand‑denominated loan from the NDB eliminates currency mismatch risk. The NDB is able to do this by issuing bonds in these currencies—so‑called “panda bonds” in China, “masala bonds” in India, and “sukuk” in the Gulf—and using the proceeds for on‑lending.

The NDB’s move is backed by newly created currency swap lines among BRICS central banks. In April 2026, the People’s Bank of China and the Reserve Bank of India renewed and expanded their bilateral swap arrangement to 500 billion rupees/400 billion yuan, providing a liquidity backstop that makes such lending sustainable (RBI Press Release, April 2026). The NDB is also developing a synthetic currency basket, the “BRICS Unit,” to price some loans, though this remains a medium‑term project.

An Alternative to SWIFT Takes Form

Even more transformative is the creation of a new alternative to SWIFT. Since the expulsion of several Russian banks from SWIFT in 2022, BRICS nations have been building a decentralized messaging framework that connects domestic instant‑payment systems. India’s Unified Payments Interface (UPI), China’s Cross‑Border Interbank Payment System (CIPS), Russia’s System for Transfer of Financial Messages (SPFS), and Brazil’s PIX are now partially interoperable through a common protocol hub run by the BRICS Payments Task Force. In June 2026, the task force demonstrated a live transaction in which a Saudi Arabian bank sent a riyal payment to an Ethiopian coffee exporter, routed via CIPS and settled through a network of correspondent banks, in under 30 seconds (BRICS Business Council, June 2026).

The system does not yet replace SWIFT’s ubiquity, but it offers a parallel track. Crucially, it allows member nations to clear trade without being subject to US secondary sanctions. For Iran and Russia, this is vital; for the others, it provides a bargaining chip and insurance policy. The BIS noted in its 2026 annual report that “the fragmentation of payment systems is accelerating, with geopolitical alignment increasingly determining the rails on which money travels” (BIS Annual Economic Report 2026).

The Petrodollar Recycling Shift

Saudi Arabia’s active participation is a game‑changer. The Kingdom, which joined BRICS in 2024, has begun accepting yuan for a portion of its oil sales to China. While the share is still small—around 5% of total exports—it has risen from zero in 2022 and is expected to reach 15% by 2028. The Saudi Public Investment Fund, as detailed in Article 18, is diversifying its reserve holdings away from US Treasuries. This “petroyuan” arrangement, combined with NDB lending in local currencies, is gradually chipping away at the dollar’s dominance in commodity markets.

However, full de‑dollarisation remains a distant prospect. The dollar still accounts for 58% of global reserves and 88% of foreign exchange transactions. The BRICS currencies lack the deep, liquid capital markets that are necessary to absorb large‑scale reserve diversification without causing excessive volatility. The renminbi, the most advanced challenger, still has strict capital controls and a current account surplus that limits its global supply. The Euro, not a BRICS currency, is a more potent rival to the dollar, and the digital euro pilot (Article 3) further strengthens its international role.

Investment and Policy Implications

For global investors, the BRICS local‑currency push creates new opportunities and risks. Local‑currency emerging market bonds, particularly in India and the Gulf, are attracting record inflows. The J.P. Morgan GBI‑EM index has increased the weight of Indian fully accessible route bonds, and Brazilian real‑denominated green bonds are seeing strong demand. On the risk side, currency volatility remains high, and the lack of a common BRICS settlement unit means transaction costs are still elevated. Firms engaged in trade with BRICS nations need to develop multi‑currency treasury capabilities, including the ability to invoice and hedge in renminbi and rupees.

The geopolitical dimension is clear: the US dollar’s “exorbitant privilege” is not disappearing, but it is being eroded at the margins. The BRICS strategy is not to overthrow the dollar but to create a viable alternative ecosystem that gives its members strategic autonomy. The NDB’s $15 billion commitment is a down payment on that vision. The West should pay attention: the plumbing of the global financial system is being rewired, one local‑currency loan at a time.