The 2026 BRICS summit under India presidency is all set to take place in September. At this point, BRICS represents a larger share of the global economy (based on Purchasing Power Parity) than G7 does, and has grown in terms of its membership base also. However, each year, when summit starts, BRICS is discussed as a rising bloc against the economic dominance of the west and each year member nations strongly clarified that this is not an anti-west forum, but another forum promoting multipolarity and shared prosperity. But, under the veneer of these carefully managed statements, something less comfortable is going on. Intentionally or unintentionally, BRICS countries are shifting their economic woes to one another. They are introducing their digital currencies, choosing prices for commodities, and creating monetary policies without consulting member nations. They are constantly causing inflation, losses of export revenues, and growth stagnation to their so-called partners. Today, the bloc may have developed the lexicon of an economic alliance but not the institutional framework necessary to make an economic alliance work.

What BRICS Promised vs. What It Built

It would be dishonest to claim that BRICS has created nothing. The ‘Contingent Reserve Arrangement (CRA)’, established by the organization in 2014, is a fund of $100 billion and acts like a balance-of-payments insurance instrument, which could be regarded as equivalent to IMF functioning. In addition to that, BRICS has tried to use a local currency settlement called 'BRICS Pay.' However, CRA exists to provide emergency liquidity during a crisis, not to monitor or coordinate the everyday currency, commodity, and inflation spillovers members impose on one another. Thus, BRICS has crisis-response tools but no surveillance or coordination tools at all.

At the time of the formalisation of BRICS in 2009, there was a clear agenda to establish an alternative to Bretton Woods institutions, which had long determined the conditions of global economic governance. Since then, the rhetoric has been more strident. The least stated but most aggressively touted of the BRICS economic objectives is their desire to de-dollarize the world, which means to decrease the role of the US dollar in international trade and as a global reserve currency.

But, with all these ambition, intra-BRICS trade still takes up a very small percentage, it is roughly around 18%, while the intra-EU trade represents about 60% of the total trade of the EU's members. It is because BRICS does not have an institutional mechanism to promote economic sovereignty among member nations. Nearly after 20 years, BRICS does not have a central bank mechanism like EU, no common inflation benchmark, and no established protocol for one member to flag economic damage arising from another member's policy. So, it has ended up as an ‘economic family’ without the ‘family spirit’ needed for solidarity.

Currency Wars Nobody Admits are Happening

The export of economic damage to other countries, especially within BRICS, is perhaps the most visible repercussion. The clearest evidence is the People's Bank of China's strategic management of the yuan's exchange rate to support exports. The yuan was devalued by roughly 3% against the dollar in 2015, weakened during 2018-2019 amid the U.S.-China trade war (falling past 7 yuan per dollar for the first time in over a decade), and depreciated further through 2022-2023 as China’s post-pandemic recovery lagged. In return, this devaluation had a direct impact on Indian and Brazilian manufacturers competing in the same global markets.

By contrast, the European Union has institutional mechanisms, imperfect but nonetheless real, through which currency spillovers are at least acknowledged and debated. In the eurozone, the mandate of the European Central Bank (ECB) explicitly requires consideration of how monetary policy decisions affect member states across the union, creating a framework for discussion and coordination of cross-border monetary impacts. BRICS has no such equivalent forum.

Commodity Cannibalism: When Partners Become Competitors

Where currency devaluation transmits cost shocks through exchange rates, commodity overlap transmits them directly through the global pricing of identical goods. ‘BRICS+’ has a structural weakness that it had not yet acknowledged. The members include some of the world's biggest exporters other than China, such as Russia (oil, gas, metals, wheat); Brazil (iron ore, soybeans, sugar); South Africa (platinum, gold, coal); Saudi Arabia (oil, gas); India (Pharmaceuticals, textiles, IT) and the UAE (oil, gas). These countries do not have complementary production. They serve in parallel global markets. And when one of them plays in his own economic interests, others bleed (See Table 1). 

Table 1: BRICS+ Major Commodity Exports and Competition Matrix

Source: WTO Statistical Review and IMF Primary Commodity Price System, compiled by the author from 2024-2025 data.

Now let us see the occurrence of commodity cannibalization in BRICS+.  In 2024, Saudi Arabia and the United Arab Emirates joined the group, thus making the economic influence of BRICS+ even greater. At the same time, such an enlargement also led to a certain contradiction that exists within this bloc. One should keep in mind that Russia, Saudi Arabia, and the UAE are leading oil exporters with very similar markets. In recent years, especially after 2022, Russia has been regularly selling its oil at reduced prices as a means to continue oil exports despite the Western embargo, with Urals crude trading at a discount to Brent that reportedly reached over $30 per barrel in 2022. Even though this has been helping some importers, this approach leads to competition between these countries in oil markets. In other words, one country within BRICS may be negatively affecting another country's economic interests in terms of the same commodity being exported. It is worth noting that Russia and Saudi Arabia already coordinate production quotas through OPEC+, the forum that exists specifically to manage this kind of overlap between major oil exporters. That coordination, however, is narrow by design, it addresses aggregate output levels to manage global prices, not the bilateral discounting and market-share competition.

Importing Inflation: The Hidden Tax of Bloc Membership

India and China have the largest business relationship in the world when compared with any other developing nations. India imports up to $130 billion worth of goods annually from China, mainly electronics, manufacturing machinery, chemicals, and pharmaceuticals. This dependency forms a concealed but powerful pathway through which inflation gets into the Indian economy. Whenever China increased production costs, whether it's because of higher wages, costly energy, or disruption in the production chain, the cost is reflected in the price of the Chinese exports. As soon as the exporters hike their prices, the companies importing products from China are faced with increased production costs which are eventually passed to consumers.

However, these externalities of inflation have been neither measured nor taken care of in BRICS. There is no forum through which they can be deliberated upon, as well as there is no mechanism through which they could be mitigated. Consequently, what appears to be a mutually beneficial trade relationship can, in practice, impose a disproportionate inflationary burden on countries that are highly dependent on Chinese imports. Importantly, this asymmetry is not limited to China's trade relations within BRICS. Similar imbalances can be observed across several bilateral economic relationships among BRICS members, where differences in economic size, production capacity, and trade dependence create uneven distributions of costs and benefits.

Truth behind BRICS De-Dollarisation Dream

The bloc's biggest economic paradox emerges here, and maybe not so much talked about amongst its members. De-dollarisation is sometimes described as a route to financial freedom. However, it can also give rise to new financial fragilities, unless robust institutions are provided. Despite the many criticisms levelled against the US dollar dominance and the imbalances it has brought in international trade, the dollar has historically served an important stabilising function in trade. It served as a widely used price level standard to lessen the effect of the fluctuation of currencies.

When BRICS countries want to trade in their own currencies (Rupees for Rubles, Yuan for Brazilian Real, and more) the fluctuations in the less traded currency pairs are much more important. Currency pairs characterized by low trading volumes, limited liquidity, and wide bid-ask spreads, such as INR/RUB, tend to experience greater exchange-rate volatility. In the absence of deep and liquid foreign-exchange markets, economic shocks are more likely to generate sharp currency fluctuations, increasing uncertainty for traders and investors. As a result, inflationary and other macroeconomic shocks originating in one member economy can be transmitted more unevenly and with greater intensity to its trading partners.

Now let’s understand this more clearly with an example. India wishes to purchase Russian crude oil. Assume that the value of the oil shipment is $100 million. This sale is conducted normally in USD. India changes rupees into dollars, Russia gets the dollars. In this concession, India and Russia do not have to deal with the tides of exchange rates between the Rupee and the Ruble. Here, the dollar serves as a buffer. Now suddenly Ruble become a weaker currency in comparison to Rupee after the deal is signed. But India or Russia need not be concerned with the rate. The exchange-rate shock between the two countries is already absorbed by the dollar.

Next, what if the BRICS group choose to have no trade dealings in dollar at all and engage in bilateral trading with their own currencies? Now again consider the example of Rupee-Ruble trade. The Rupee-Ruble market is not possessing such liquidity like dollar has in the market. Bothe these currencies have fewer traders and less volume of trading. This leads to significant exchange rate swings to a small economic shock. Suppose that on Monday the exchange rate is ₹1 = ₽1. India purchases Russian oil worth ₽100 million and therefore pays ₹100 million. Later that week  turbulence in global energy markets increase demand for Rubles, causing the exchange rate to move to ₹1 = ₽0.7. In other words, one rupee now buys fewer Rubles than before.

Now to purchase the same ₽100 million worth of oil, India must now pay approximately ₹143 million instead of ₹100 million. The quantity of oil has not changed, yet the cost in rupees has increased by more than 40 percent due solely to exchange-rate movements. In a deep and liquid currency market, such fluctuations would be partly absorbed by a large pool of buyers, sellers, and financial instruments. Thus, in this case, the point made was not that BRICS members have to stop using their currencies in transactions with each other but to mark that any ‘De-dollarisation Dream’ will never be a financial independence if it is done without monetary coordination.

Another issue arises from the fact that developing new financial infrastructure takes time and efforts. In 2026, one of the most ambitious projects in this regard, which is mBridge, is still at a relatively early stage of development. Notably, the ‘Bank for International Settlement’ itself withdrew from the project in October 2024, handing it over to the participating central banks, which underscores how far it remains from operational scale. Although the project has progressed beyond the experimental phase, significant technological, regulatory, governance, and geopolitical challenges remain unresolved. Meanwhile, the U.S. dollar continues to dominate international payments. According to the Swift's Global Currency Tracker, the dollar has accounted for roughly 47-49% of SWIFT-processed payment, while despite years of efforts to internationalize alternative currencies and payment systems, their global usage remains comparatively limited.

BRICS: Showing Ambition Without Architecture

The key issue for BRICS is not whether there are any economic spillover effects. All major economic groups have them because of the global economy’s interdependence. Economic factors such as inflation, exchange rate fluctuations, commodity prices, and monetary policies inevitably spill over from one country into another. The one difference is that most successful economic groupings eventually built institutions to manage these consequences. Monetary coordination was created in the European Union; regional financing systems were established in ASEAN and even G20 created forums for discussing such macroeconomic issues.

BRICS, on the other hand, was not conceived as an economic union from its inception. Rather, it is a diplomatic grouping based on concepts of sovereignty and strategic independence, among others, that wanted a more multipolar world order. That model allowed members to cooperate politically while avoiding the obligations of deeper economic coordination. However, many economic problems exist, such as Chinese inflation transmitted through imports, commodity shocks affecting exporters, volatile local-currency trade arrangements, and ambitious de-dollarization initiatives. These all-stated externalities points that BRICS is making economies dependent upon each other but without the governance structures required to manage it.

But the solution to these problems does not involve the creation of a BRICS central bank, a common currency, or even any diminution of national sovereignty. What it does involve is a realization that economic interdependence is both a source of opportunity and obligation. A workable model already exists in ASEAN+3’s Economic Review and Policy Dialogue process, which performs macroeconomic surveillance among a similarly diverse, sovereignty-protective membership without requiring any member to cede monetary authority. BRICS could attach a comparable function to its existing finance ministers’ track, starting with something as low-cost as a non-binding annual spillover report, that simply tracks and publishes how members’ currency, commodity, and trade decisions are affecting one another. Modest but meaningful mechanisms for consultation, spillover monitoring, and monetary dialogue would help members anticipate and manage the costs they impose on one another. None of this is likely to happen quickly. Closing this gap will not come from reducing reliance on Western institutions, but from finally building the coordination machinery.