Dedollarization: the BRICS completely change course

While geopolitical rivalries are rekindled, dedollarization is again imposed as a lever of monetary sovereignty. Long spearhead of this ambition, the BRICS seemed to want to challenge the economic order dominated by Washington. However, a strategic repositioning of Brazil, an influential member of the block, comes to shake up this trajectory. By dismissing the idea of ​​a common currency, the country rebatted the cards of an already weakened project, revealing the limits of monetary coordination in the face of the reality of economic power relations.

Realism prevails over monetary idealism

Brazil, while actively supporting the initiatives of the BRICS which aim to reduce dependence on the dollar, such as the exploration of alternative payment systems and the progressive adoption of blockchain technologies, has been more cautious about the feasibility of a common currency.

In a statement, the director of monetary policy of Brazil, Nilton David, broke the momentum of the British Alliance, and announced that no stock of assets denominated in the group's currencies was now substantial to compete with the US dollar.

Indeed, he has assertive “That there is little chance that it will change during the next decade”speaking of the domination of the US dollar.

A declaration heavy with meaning, especially coming from the country which ensures the rotating presidency of the BRICS block in 2025. This turnaround marks a net decline in relation to the historical positions of Brazil, which was however a fervent defender of a monetary alternative to the system centered on the dollar.

In light of this declaration, several elements make it possible to understand the scope of this change of posture:

• The recognition of an economic reality: despite the ambitions declared, no stock of currencies or alternative system seems to be able, in the short or medium term, to effectively compete with the place of the dollar on international markets;

• A lack of internal cohesion within the BRICS: the very different approaches to the members, in matters of monetary policy and management of reserves, make any collective initiative very difficult to coordinate;

• The absence of supranational governance: unlike the European Union with the ECB, the BRICS do not have a common institution to pilot a possible single currency, which complicates any coherent dedollarization strategy;

• A persistent structural dependence: a large part of international exchanges, including those made between the members of the block, remains labeled in dollars. The transition would therefore be expensive, long and technically complex.

In short, Brazil, by this declaration, seems to confirm a truth that many economists have whispered for months: the hegemony of the dollar cannot be reversed by political will alone.

It will take more than a common project and symbolic declarations to erode its domination.

A global political context that redefines priorities

This strategic inflection of Brazil intervenes in a tense diplomatic context to say the least. Indeed, from the first 100 days of his second term, American president Donald Trump threatened the BRICS with severe economic sanctions, in particular via the establishment of customs prices up to 150 %.

This ultra-protectionist posture aims to punish the initiatives of the block relating to the marginalization of the dollar in international trade. Although these threats have not yet been implemented, they weigh heavily in the political and economic calculations of the members of the BRICS Bloc.

This change from your Brazilian side seems to reflect a desire to de -escalation in the face of the rise of trade tensions with Washington. The return of President Trump obviously cooled the hints of front rupture.

Unlike Russia or China, Brazil remains economically dependent on exchanges with the United States. Thus, this reality limits its room for maneuver and could explain this realistic rereading of the ambitions of the BRICS. In other words, it may not be an abandonment of dedollarization, but a strategic slowdown motivated by the economic situation.

If the Brazilian declaration sounds like a decline, it does not necessarily sign the failure of dedollarization. It could mark the beginning of a more prudent, longer and more progressive phase, where the questioning of the hegemony of the dollar will be by peripheral adjustments rather than by direct confrontation. Even if the BRICS single currency project seems to be abandoned, the members of the Alliance will now have to deal with the opposite winds of an unstable geopolitics and an offensive return of American unilateralism.