Introducing The Series

The global financial order has been anchored by the dominance of the U.S. dollar (USD) since 1944 as the world's primary reserve currency. This hegemony is underpinned by the ingrained role of the USD in international financial infrastructure, the Western-dominated international payment systems, and the absence of a viable alternative.

The dominance of the USD post World War II (WWII) has fueled the rise of the American empire by solidifying the United States' economic and geopolitical influence worldwide. As the world's primary reserve currency, the USD has provided the United States with unrivaled financial leverage, allowing it to shape global trade, impose unilateral sanctions, and sustain persistent trade deficits without facing significant economic repercussions.

The BRICS (Brazil, Russia, India, China, and South Africa) bloc has historically sought to challenge this dominance, advocating for de-dollarization to reduce their reliance on the USD as it became increasingly weaponized in geopolitical confrontations. However, logistical barriers, along with the threat of isolation, have rendered these aspirations and threats largely symbolic— until now.

After decades of gradual culmination, the stars seem to be aligning for the BRICS to actualize their lifelong goal of reducing reliance on the USD. The 2024 expansion of BRICS, growing Western geopolitical fragmentation due to Russia’s war on Ukraine and Trump’s reckless foreign policy, China’s rise as a geopolitical and economic rival to the U.S., and rising distrust in Western economic institutions and American fiscal policy are collectively setting the geopolitical stage for a potential shift away from the USD.

While the geopolitical conditions for a de-dollarization moment to take place are ripe, the question remains: how can BRICS operationalize this shift? The answer, I argue, lies in Central Bank Digital Currencies (CBDCs). CBDC technology offers a long-overdue technological infrastructure that can facilitate the creation of multiple financial channels, bilateral and multilateral, to circumvent Western-dominated financial institutions and mitigate the risks of economic coercions through sanctions and trade restrictions.

Unlike previous theoretical proposals for de-dollarization, which faltered due to logistical and systemic constraints, CBDCs offer a practical mechanism for conducting direct peer-to-peer cross-border trade, settlement, and financial transactions outside of the traditional USD-based financial order.

This series aims to explore how CBDC technology can provides the BRICS with the first viable blueprint for a tangible de-dollarization wave. While de-dollarization remains fundamentally a geopolitical issue, the technical feasibility of an alternative financial system has always been a limiting factor. The development of CBDCs, particularly Wholesale CBDCs (W-CBDC), addresses key infrastructural challenges, creating a more efficient, and autonomous financial ecosystem for BRICS and its partners.

The series is structured as follows: First, it contextualizes the dollarization and subsequent de-dollarization phenomena, highlighting the motivations driving BRICS nations toward this goal. Second, it examines recent trends in BRICS, including its membership expansion and renewed interest in de-dollarization. Third, the series evaluates the three potential pathways for BRICS to de-dollarize: adopting an existing non-USD currency, creating a new BRICS currency, or leveraging CBDC technology. The discussion will demonstrate why CBDCs present the most effective solution. Additionally, by examining the most prominent cross-border W-CBDC project, mBridge, the discussion illustrates how this transition is unfolding in real time. Finally, the series discusses three key geopolitical implications of a CBDC-driven de-dollarization wave.

The exploratory study concludes that CBDCs offer BRICS an unprecedented opportunity to escape USD dominance. While a complete abandonment of the USD as a reserve currency is unlikely to occur anytime soon, the adoption of CBDCs, and their potential normalization as a viable option to conduct cross-border transactions, will chip away at the USD dominance in the coming decades.