BRICS Builds Gold-Backed Finance Systems as Dollar Weakens

At a recent summit in Rio de Janeiro, BRICS officials advanced discussions on a new guarantee fund to support financing within the bloc. The initiative was paired with BRICS Pay, a payment system first proposed in 2018 to reduce reliance on Western-controlled financial infrastructure. The urgency has only grown since Russia’s exclusion from parts of the Swift network in 2022—a move that cost its banks nearly $250 million in just six months.

Highlighting the geopolitical risks, China’s central bank governor Pan Gongsheng warned: “Any currency dominated by a single country is vulnerable to being weaponised during geopolitical conflicts.” Swift remains under the oversight of G10 central banks and the European Central Bank, leaving the West in control of who participates. This imbalance continues to fuel BRICS’ push toward de-dollarization.

A key pillar of this effort is gold accumulation. Together, BRICS nations now hold more than 6,000 tons—about 20% of all central bank reserves worldwide. Russia and China account for nearly three-quarters of the bloc’s total, giving weight to ongoing debates about the feasibility of a BRICS common currency. Between 2008 and 2021, the bloc’s gold holdings surged by 22%, far outpacing global averages.

Meanwhile, local currency trade is steadily replacing the dollar. Traditionally, dollar-denominated trade exposed businesses to currency risks and forced them to hedge through banks requiring dollar liquidity. By shifting to local settlements, BRICS economies have largely eliminated this dependency. China has taken the lead, reducing its US Treasury exposure and striking bilateral deals that promote renminbi-based trade.

Other BRICS partners are following suit. Egypt, for instance, issued panda bonds in renminbi to diversify financing options. More broadly, trade among Global South nations has ballooned from $2.3 trillion in 2007 to $5.6 trillion in 2023, creating fertile ground for new financial models.

With the dollar experiencing its weakest start since 1973—falling over 10% against major currencies—BRICS is pressing ahead with incremental but decisive moves. Instead of launching a sudden new currency, the bloc is building a system grounded in payment rails, gold reserves, and local trade agreements. The transformation of international finance is underway, and BRICS is at its core.