September 25, 2026—The model of a U.S.-led global economy, long established since the start of the 1944 Bretton Woods system, is coming under significant strain. It is not just wars disrupting freedom of navigation and the price of oil causing cracks in the system. Nor is it only a reflection of the mounting U.S. debt and annual deficits. It is also a growing movement towards multilateralism. What gives that momentum are shifts toward competing financial infrastructures, new geopolitical alliances, and novel methods of settling cross-border payments. These pose challenges to the existing order and the dollar-dominated trading system.
In the past month, we’ve witnessed the greatest acceleration this change. We see new strategic alliances, less trust in the U.S. defense, and a ground-up infrastructure under the BRICS bloc and the G20 organization.
Dollar Dominance Amid Disruptions
The ongoing U.S.-Iran war has rattled global energy markets, disrupting flows of cargo carrying oil and liquefied natural gas. It affects air travel, supply chains, and access to clean water. More broadly, it unsettles financial systems and sovereign debt markets.
Still, the U.S. dollar remains the dominant international currency. As the GER discussed in February, the greenback is still a top choice for settling trades between two other currencies. Furthermore, Central banks held 57 percent of their foreign exchange reserves in U.S. dollars in early 2026, according to the International Monetary Fund.
At one point, contenders to the dollar system floated ideas for an alternative reserve currency. Now, more countries are working around that. Instead, they are building mechanisms to settle international payments outside the dollar system.
Along Comes BRICS
Since its first meeting of Brazil, Russia, India, and China in 2006, leaders of the emerging “BRICS” has had periods of high ambitions. At one point, Brazil’s leader Luiz Inácio Lula da Silva takes a more brazen approach, questioning the merits of the U.S. dollar as the world’s currency. “Who decided that the dollar was the (trade) currency after the end of gold parity?” Lula said while on a state visit to Beijing in 2023. Lula’s predecessor and contender, former president Jair Bolsonaro bolstered Brazil’s bilateral trade and investment with China and mapped out plans for “strategic and long-term” relations. Today, Bolsonaro is once again contending for the presidency.
Today, the bloc has grown to 11-members plus 10 partners. Many of its leaders still have high ambitions but the one-time dream of a BRICS global currency is off the table. In lieu of that, members are increasing cross-border transactions in their local currencies and building up financing tools.
As BRICS evolves, it will be interesting to see how it influences national politics, movements, and geopolitics. Accounting for 40 percent of global GDP, the bloc has considerable economic sway if used effectively. However, its expanding membership means that regional rivals like Egypt and Ethiopia and Iran and Saudi Arabia have to set aside their differences. It appears they are willing to set bilateral differences and disputes aside for the sake of cohesion in the bloc.
Perhaps one of its largest ambition is in challenging the U.S. global hegemony and by strengthening a multilateral system. Notably, the BRICS’s vision for an alternative system is not based on a democratic order. But neither is the current system. The world is less democratic today than a decade ago.
Who’s In BRICS? Expanding Membership
The bloc includes major political players, such as its founding members Brazil, Russia, India, China, and South Africa, and continues to grow its membership. Today, middle powers in strategic geographic positions are part of the bloc: Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia*, and the United Arab Emirates. Furthermore, a second wave of expansion includes 10 nonmember “partner” countries: Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, Uzbekistan, and Vietnam.
*Saudi Arabia is considered a member of BRICS but has not formally confirmed membership through ratification. Saudi leaders participate in meetings while keeping diplomatic options open.
BRICS Summit in India
Earlier this year, India laid out an aspiring agenda. Indian Prime Minister Narendra Modi has a special interest in aligning digital currencies and facilitating cross-border trade, including outside the reach of U.S. sanctions. This month, India hosted the 11-member BRICS Summit, which included the largest-ever gathering of the bloc’s Business Forum.
Meeting in India in September, BRICS unanimously approved a 45-page communique, the New Delhi Declaration. It is a vast document that covers an array of objectives:
- Finance: More local-currency financing, cross-border payment interoperability and further development of the New Development Bank.
- Culture: It includes sports diplomacy, tourism, and education.
- Business-to-business ties and promotion of harnessing private capital for investments and development.
- Trade: Opposing unilateral tariff and non-tariff measures and “coercive measures” like economic sanctions outside the scope of the UN Security Council while supporting the World Trade Organization.
- Human Rights: Rights to development, health and food security.
- A Two-State Solution for Israel and Palestine.
Core Value: National Sovereignty
The weight and scope of the document shows that BRICS is a forum for strengthening economic and diplomatic ties for members and partners. It is developing an international financial infrastructure outside the Bretton Woods model and putting forward common principles centered around a core value of respecting sovereignty of nation states.
National sovereignty is a key concern for many of its leaders, particularly Chinese President Xi Jinping, Russian President Vladimir Putin. Notably, Putin received significant applause during his BRICS 2026 speech. He emphasized that BRICS gives member countries chances to business-to-business relations in “a stronger, resilient manner.” That’s especially important for a country like Russia that is under U.S. and European Union sanctions, and perhaps that is what Putin was referring to when he said the bloc “helps overcome the problems the world is facing.” He noted that Russia has maintained its national sovereignty—despite the sanctions—by conducting “structural changes that rendered economy resilient.”
The GER has previously covered the sanctions regime, including the U.S. Treasury’s assessment of its impact as well as Russia’s structural changes that helped it adapt to pre-war sanctions. Even before the Russia-Ukraine war, Western human-rights related sanctions against Russia had the effect of fomenting ties between it and its neighbor Belarus.
Addressing the BRICS Summit 2026, Putin emphasized the “structural deep, profound shifts” happening in the global economy. He poked fun of the “so-called G7” for only contributing 29 percent to global GDP. It is not surprising Putin would single out the G7, the organization consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States that has collectively tightened sanctions against Russia for its war with Ukraine.
Speaking of the United States without naming it directly, Putin said the old “vanguard of economic growth” still benefits from infrastructure, technology, scientific advantages, and universities but faces challenges from “new engines of growth.” He noted examples of ingenuity within BRICS, notably China’s Huawei, Brazil’s aerospace, the UAE’s logistics, and Russian nuclear energy.
Bessent Defends the US Dollar
What will be interesting in the near and far term is to see how well the United States can keep its leadership position. It is still the world’s largest economy, with GDP in 2026 of $32.5 trillion. At the recent G20 finance meeting in North Carolina, Treasury Secretary Scott Bessent pressed the group to support U.S.-led economic growth by investing in AI. The group failed to reach consensus on global economic imbalances in its concluding statement. All members but China took part in addressing concerns about “cheap exports.”
Just days after BRICS leaders met in New Delhi, U.S. Treasury Secretary Scott Bessent offered a markedly different assessment of the international financial system during testimony before the House Financial Services Committee.
Bessent argued that the dollar continues to thrive despite efforts by Russia, China and other countries to reduce their dependence on U.S.-dominated financial institutions.
“As a share of global transactions, the U.S. dollar continues to thrive,” Bessent told lawmakers.
Bessent acknowledged a decline in the dollar’s share of global reserve assets, which he attributed largely to reduced holdings by Russia and China. He pointed to demand for U.S. Treasury securities as evidence that international confidence in the American financial system remains strong. He said the United States had recently experienced two of its most successful long-term Treasury auctions in 20 years. However, borrowing costs on long-term U.S. debt continued to rise throughout the month as investors abandoned sovereign debt. By Friday, the yield on the 30-year Treasury bond soared to 5.53 percent, the highest level since 2004. Meanwhile, the 10-year Treasury bond rose to 5.23 percent.
The U.S. economy continues to grow, albeit at a mild rate of 1.5 percent. Moreover, U.S. stocks continued to attract investment. As for the U.S. dollar, it is unclear if and when it takes a hit.
Technological Disruption
Eswar Prasad, senior fellow at the Brookings Institution and professor at Cornell University, dismisses chances that a single or even multiple foreign currencies would replace the U.S. dollar as the lead in global finance. He suggests that innovation in the finance sector, specifically cross-border payment systems, may make
“What could yet disrupt entrenched dollar dominance is technology,” Prasad writes in a recent op-ed piece in the Financial Times.
What is noteworthy is that it is not a given technological disruption would weaken the U.S. dollar. As Prasad and his colleagues note in a recent analysis for the Kansas City Fed, the dollar might actually strengthen due to the large size of U.S. capital markets, especially if the central bank innovates with the use of stablecoins.
