BRICS Payment Rails: De-Dollarisation Without the Dollar Losing (Yet)

The BRICS payment-rails conversation has changed shape. For most of the past decade, the project existed as an aspirational announcement — the kind of geopolitical communiqué that marked the end of each summit and committed no one to any specific technical deliverable. Over the past eighteen months, the communiqués have produced working systems. BRICS Bridge, the multilateral CBDC-adjacent settlement platform jointly developed by the People's Bank of China and the central banks of Russia, the UAE, and Thailand, has transacted roughly $150 billion in cumulative settlement volume. Local-currency trade settlement among BRICS members has crossed a quarter of total bilateral trade. Russia's domestic alternative to SWIFT, SPFS, now connects more than 150 foreign counterparties. The question is no longer whether alternative payment rails exist. The question is what they change.

The answer is not straightforward. The dollar retains 88 percent of global trade invoicing, 58 percent of global reserve holdings, and the overwhelming majority of liquidity in global foreign-exchange markets. The structural features that produced dollar dominance — deep and liquid US Treasury markets, institutional capital-markets infrastructure, the network effects of widespread counterparty acceptance — have not been displaced and will not be displaced on any reasonable forward timeline. What has been displaced is something more specific: the unilateral enforcement mechanism that dollar dominance has enabled since approximately 2014.

The sanctions-enforcement context

The modern US sanctions regime — the OFAC-centred architecture that applies secondary consequences to foreign entities transacting with sanctioned parties — depends on a specific technical substrate. Dollar-denominated transactions clear through US correspondent banks. US correspondent banks are subject to US financial supervision. Compliance obligations flow through the dollar clearing system to every counterparty that touches it. This is what makes US sanctions extraterritorially effective. A non-US bank transacting with a sanctioned Russian counterparty faces the risk that its access to the dollar clearing system will be revoked. That risk is sufficient to shape conduct.

Alternative payment rails do not need to displace the dollar's reserve-currency status to hollow this mechanism out. They need only to reduce the share of cross-border transactions that pass through dollar clearing. A Russia-China oil shipment settled in yuan through a non-SWIFT rail does not touch the US correspondent-banking system. The sanctions enforcement apparatus has no grip on it. What BRICS Bridge and its peer systems have built is not a replacement for the dollar's monetary functions — it is a bypass for the dollar's sanctions-enforcement function.

What has actually been built

The operational infrastructure now includes several components. BRICS Bridge provides multilateral settlement in central-bank digital currencies across participating members, with processing times measured in hours rather than the days required by traditional correspondent-banking rails. China's Cross-Border Interbank Payment System (CIPS) has expanded its direct-participant network to more than 150 banks and provides yuan-denominated settlement for Chinese import-export flows, now at a scale that exceeds the equivalent SWIFT volume for Chinese trade.

Russia's SPFS connects foreign financial institutions to a SWIFT-equivalent messaging layer that operates independently of the Belgian cooperative. The system's limitations are real — lower volume, less sophisticated reconciliation, fewer counterparty relationships — but it operationally works. The UAE's mBridge collaboration provides a multi-CBDC settlement capability across Middle East and Asian counterparties. India's UPI-international extensions are onboarding retail and mid-market cross-border flows.

The point is not that any one of these systems has replaced the SWIFT-and-dollar stack. The point is that a fabric of alternative rails has emerged in which transactions between sanctioned or sanction-wary counterparties can be settled without interacting with dollar clearing at any point in the chain. Before 2022, such transactions had to either touch the dollar system (accepting sanctions exposure) or operate through informal channels (accepting counterparty risk and settlement uncertainty). The new rails produce a third option that is formal, reconcilable, and scalable.

The Russia-sanctions test case

The post-2022 Russia sanctions regime provides the cleanest empirical test. Russia was removed from SWIFT messaging in early 2022 and faced progressive tightening of secondary sanctions on counterparty banks. A significant share of Russian trade — oil, gas, agricultural commodities, and industrial imports — has continued to move at volumes only modestly below pre-sanction levels. The settlement layer for that trade has migrated to yuan, dirham, rupee, and to a lesser extent ruble-denominated rails that do not pass through dollar correspondent banks.

This is not a counterfactual proof that the sanctions failed. The Russian economy has absorbed real costs from the sanctions regime, and the diversion of trade through alternative rails has extracted efficiency and pricing costs that show up in Russian public-finance data. What it does prove is that the marginal unit of cross-border trade from a heavily-sanctioned major economy can now be settled through non-dollar infrastructure at scale. That is a new capability. It did not exist before 2014. It existed only in thin, symbolic volume by 2020. It exists at material operational scale in 2026.

The reserve-currency question, unanswered

None of this resolves the reserve-currency question. Dollar dominance is a function of the combination of US Treasury market liquidity, US capital-markets depth, and the network effects of universal dollar acceptance. The replacement for that role would require not only an alternative settlement rail but an alternative store-of-value substrate comparable to the US Treasury complex. China's sovereign debt market is too shallow and too opaque to serve that function. The euro is the natural candidate but has historically declined the role, and European fiscal architecture does not support the single-issuer debt supply that would be required. The yuan has advanced but remains subject to capital-account restrictions that prevent the depth that reserve-currency status requires.

The most plausible near-term outcome is not reserve-currency displacement but reserve-currency fragmentation. Smaller central banks diversify modestly away from dollar holdings, maintain larger yuan and gold positions, and operate reserves across a more varied set of instruments. The dollar retains primary status with reduced share. The sanctions-enforcement leverage, however, does not decay proportionally to the reserve share. It decays proportionally to the share of transactions that pass through dollar clearing, which is a different and faster-moving variable.

The counterpoint

The dollar's defenders argue that the BRICS payment-rails volumes remain marginal relative to the total scale of global trade and capital flows, that the alternative systems have governance and counterparty-risk issues that will limit their expansion, and that in any serious financial crisis the world will flee to dollar liquidity as it has in every comparable episode since 1971. These arguments are broadly correct on their own terms.

The question is whether the marginal volume is the right metric. If the marginal sanctioned transaction can now be settled outside dollar clearing, the enforcement regime that depends on dollar clearing has been hollowed out at the margin where it matters. The dollar's crisis-haven role is intact. Its role as the substrate for unilateral financial coercion is not.

What to watch

The near-term signal is Iran. Iranian access to BRICS Bridge, CIPS, and SPFS has expanded materially since the 2023–2024 normalisation wave with the Gulf states. If the current escalation dynamic with the United States produces a new round of sanctions and Iranian trade volumes do not contract proportionally, the inference will be that the alternative rails have matured to the point where large-scale sanctioned trade is sustainable. The second signal is the yuan share of global FX reserves, which has climbed from 1.1 percent in 2019 to 2.7 percent in 2025. A move above 5 percent by 2028 would mark the transition from nominal alternative to structural one.

Related coverage

• Trump's tariffs one year on: supply chains rebuilt, WTO rules quietly shelved — the sister dynamic on the trade-rules side: bilateral leverage replacing multilateral architecture.
• ICC sanctions and the rules-based order that isn't: a judge says the quiet part — the legal-institutional counterpart of the sanctions-enforcement erosion described here.