On Financial Shifts
The world’s financial system is quietly going through major changes. Many people are calling it a “New Financial Cold War.” What’s happening is that countries like China, Russia, and others are trying to rely less on the U.S. dollar. They want more control over their own money systems, especially as tensions with the U.S. rise and sanctions become more common.
How Important is the U.S. Dollar? And What’s SWIFT?
SWIFT is a system that helps banks around the world send money and messages to each other. It handles more than 44 million transactions every day. Even though the U.S. dollar is still widely used, only about 40–45% of SWIFT transactions are actually in dollars—not the 90% that some people assume.
The U.S. dollar still holds a strong position globally, making up 58% of all the world’s currency reserves (though that’s down from 71% in 1999). The reason it’s still powerful is because people trust it, it’s easy to use, and it’s already built into many financial systems. But when Russia was cut off from SWIFT after the Ukraine invasion, it showed how much control the U.S. has—and pushed other countries to start thinking about building their own systems.
BRICS Pay is Still in Early Stages
BRICS Pay is an idea that started in 2018. It aims to let BRICS countries—now including Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE—trade with each other using their own local currencies instead of the dollar. While there have been more talks about it, there’s no real system up and running yet.
China showed strong support for it in late 2024, but nothing official has launched. There’s talk of a new messaging system from Russian scientists, but that’s still just a concept. In 2024, trade between BRICS countries reached $2.5 trillion, but building a reliable system is hard because of problems like unstable currencies and difficulty converting between them.
mBridge is Promising but Still Not Ready
The mBridge project started in 2021, with China, Hong Kong, the UAE, and Thailand working together. Its goal is to let central banks settle international payments using digital currencies and blockchain-like technology. By mid-2024, they had tested it with $30 million worth of transactions.
But by the end of 2024, the Bank for International Settlements (BIS) stepped back from the project. They said there were still too many legal and political risks—not that the technology wasn’t good enough. The idea has promise, especially for countries that face U.S. financial restrictions. But for it to work long-term, countries will need to agree on clear rules and find ways to manage political tensions.
China’s Digital Yuan: Growing Locally, But Still Small Globally
By 2025, China’s digital currency, the e-CNY, has been used for over $400 billion in domestic transactions across the country, including for public services. Internationally, it’s used in about a quarter of China’s oil trade with Russia. But its global use is still limited because of China’s strict controls on moving money out of the country, low currency flexibility, and only about 5% of SWIFT transactions using it. China also has over 45 agreements with other countries to swap currencies, worth about $550 billion—not $800 billion as often claimed—but many of these deals aren’t actually being used. Other BRICS countries are careful not to become too financially dependent on China.
Cryptocurrencies: Useful for Avoiding Sanctions, But Not a True Replacement
As of April 2025, the total value of cryptocurrencies reached $3 trillion. There are reports that Russia used stablecoins like Tether (USDT) to trade oil with China and India, but there’s no strong evidence from major financial or energy bodies to confirm this. Cryptocurrencies can be helpful because they’re decentralised, but they come with risks—like unstable prices, unclear laws, and government crackdowns. For example, crypto exchange Binance had to pay $4.3 billion to settle with U.S. authorities in 2023. Plus, many “stablecoins” are still linked to the U.S. dollar, which means they don’t actually weaken the dollar’s dominance.
India-Russia Oil Trade: Trying New Currencies, Still Figuring It Out
In 2024, India and Russia traded about $60 billion worth of oil. Around 20% of that was paid in Indian rupees, 15% in Chinese yuan, 5% in crypto, and most of the rest in UAE dirhams or euros—which many reports leave out. India’s plan to trade using rupees and rubles didn’t work well because of problems converting currencies and Russia’s inability to use the rupees. Now they’re using more flexible options like the yuan and dirham, but India is still wary of relying too much on the Chinese currency.
Moving Away from the Dollar: Gold and Local Currencies Gain Ground
By the third quarter of 2024, the U.S. dollar’s share of global reserves dropped to 58%. In response to sanctions, BRICS countries bought over 1,500 tonnes of gold that year. Countries like Argentina, Brazil, and Russia are also trading more in yuan and rubles. But because their currencies can be unstable and their financial markets aren’t as deep, it’s hard to expand this trend quickly. Instead of a global shift, we’re seeing smaller, regional groups forming their own currency systems.
A BRICS Currency? Still Just an Idea
The idea of a shared BRICS currency—nicknamed the “Unit”—was brought up at a 2024 meeting in Kazan. It would be a digital currency tied to gold. But it’s still just a proposal. The New Development Bank is studying the idea, but major challenges remain. For example, China’s economy is about $20 trillion, while South Africa’s is only $400 billion. Differences like these, plus India’s independent foreign policy, make it hard to agree. While the NDB has issued $10 billion worth of local currency bonds, a shared currency is still far off.
Avoiding Sanctions: New Financial Tools Emerge
Projects like mBridge and BRICS Pay are being explored as ways to work around U.S. sanctions. For instance, Russia now keeps 25% of its reserves in Chinese yuan and gold. Iran may be using mBridge for some oil sales too. These tools reduce the need for SWIFT, the traditional banking system, but they could also break the global system into smaller, disconnected parts. The Bank for International Settlements (BIS) has warned that this kind of split could increase global transaction costs by tens of billions—though the $250 billion estimate is probably too high.
Global Reserve Currency Trends: Shifting Slowly
As of 2024, the U.S. dollar made up 58% of global reserves, the Chinese yuan just 3%, and gold has become more popular as a reserve. If the world uses less of the dollar, it could make imports more expensive for the U.S. and increase its trade deficit. BRICS nations may get more financial freedom but will also face economic instability and scepticism from markets. The world seems to be moving towards several regional currency systems, not one single alternative to the dollar.
Conclusion
The global financial system is slowly changing, with countries trying to reduce their dependence on the U.S. dollar. Tools like BRICS Pay, mBridge, and digital currencies show their desire for more control, but actually putting these into use is proving slow and difficult. While some parts of global trade are shifting away from the dollar, the dollar still holds a strong position. What we’re seeing isn’t a clear-cut fight, but a slow, complicated move towards a more divided and regionally-focused financial world.
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Geopolits Research Desk
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