Context: The 18th BRICS Summit, to be hosted by India in New Delhi on September 12–13, 2026, is being held under the theme “Humanity First”, amid renewed debate over reforming the Western-dominated global financial system.
- BRICS has sought to create alternatives to institutions such as the World Bank and International Monetary Fund (IMF), reduce dependence on the U.S. dollar and strengthen the financial autonomy of the Global South.
New Development Bank: Alternative or Complementary Institution?
- The New Development Bank (NDB) was established in 2015 as BRICS’ flagship financial institution to finance infrastructure and sustainable development in developing countries without Western dominance.
- The NDB was expected to promote local-currency financing and reduce dependence on the U.S. dollar; however, around half of its outstanding bonds remain dollar-denominated, while the Chinese yuan constitutes most of the remainder.
- Local-currency lending stood at around 22% by mid-2025, below the NDB’s target of 30% by the end of 2026.
- The bank’s first rupee-denominated bond was still under planning as late as September 2025, highlighting the slow progress in local-currency financing.
- Despite criticism of Western credit-rating agencies, the NDB continues to rely on S&P, Fitch and Moody’s for credit ratings.
- Following Russia’s invasion of Ukraine in 2022, the NDB suspended transactions involving Russia to protect its access to international financial markets, demonstrating the influence of existing Western financial structures.
- By the end of 2024, the NDB had approved projects worth around $39 billion, significantly smaller than the annual commitments of the World Bank Group.
- Rather than replacing existing institutions, the NDB has also co-financed projects with the World Bank and IMF, making it more complementary than competitive.
Contingent Reserve Arrangement: Limited Financial Safety Net
- The Contingent Reserve Arrangement (CRA) was established in 2015 with a proposed pool of $100 billion to provide liquidity support to BRICS members facing balance-of-payments or financial crises.
- The CRA was intended to reduce dependence on the IMF during financial emergencies but has never been activated since its creation.
- A member seeking assistance beyond 30% of its allocated amount must first enter into an IMF-supported programme, limiting the CRA’s independence.
- Unlike the IMF, the CRA lacks permanent staff, independent surveillance capabilities and a substantial research infrastructure, reducing its capacity to function as an autonomous crisis-management institution.
De-dollarisation: Aspirations versus Reality
- De-dollarisation refers to reducing reliance on the U.S. dollar in international trade, investment, reserves and financial transactions.
- Despite frequent political and media emphasis on de-dollarisation, BRICS has not adopted a unified strategy to replace the dollar-based system.
- The 2025 Rio Declaration, containing 126 points, did not explicitly use the term “de-dollarisation”.
- Russia has stated that BRICS has not sought to completely abandon the U.S. dollar.
- India has opposed the creation of a common BRICS currency, partly because of concerns over potential economic and trade repercussions from the U.S.
- South Africa considers a common BRICS currency risky, while China has preferred the gradual internationalisation of the renminbi/yuan rather than creating a collective BRICS currency.
- U.S. tariff threats against countries perceived as pursuing anti-American BRICS policies also demonstrated the economic constraints facing the bloc.
BRICS and Reform of the IMF
- BRICS declarations at the Kazan Summit (2024) and Rio Summit (2025) have called for a more adequately resourced and quota-based IMF rather than seeking to replace it.
- This indicates that BRICS primarily seeks greater representation and voting power within existing global financial institutions, rather than creating a completely separate financial order.
- The U.S. holds around 16.49% of IMF voting rights, while major IMF decisions require an 85% supermajority, giving the U.S. an effective veto over such decisions.
Why BRICS Has Not Created a Parallel Financial Order
- BRICS economies remain deeply integrated with the existing global financial system through international capital markets, dollar-based trade and Western financial institutions.
- The bloc lacks complete political and economic convergence, with members having different priorities regarding the dollar, the yuan, sanctions, exchange rates and global governance.
- China favours greater international use of the yuan, while India has generally preferred a more cautious and multipolar approach to monetary and financial reform.
- BRICS’ institutional initiatives therefore represent incremental diversification rather than a complete replacement of the existing global financial architecture.
Significance for the Global South
- The expansion of BRICS to include countries such as Egypt, Ethiopia, Iran and the United Arab Emirates indicates growing interest among developing countries in diversifying away from Western-dominated institutions.
- BRICS reflects broader dissatisfaction with IMF conditionality, unequal representation in global institutions and excessive dependence on the U.S. dollar.
- However, its institutions currently provide additional financing and negotiating space rather than constituting a fully independent alternative to the World Bank, IMF or dollar-based financial system.
