Fragmented Finance: The Rise of BRICS + & Re‑Wiring of World Economy

The admission of Saudi Arabia, the United Arab Emirates, Egypt, Iran and Ethiopia on 1 January 2024 formally converted a Goldman‑Sachs acronym into BRICS +, a 10‑nation coalition that now speaks for 46 percent of the world’s people and roughly 35–37 percent of global output at purchasing‑power parity. Their combined heft in energy, critical minerals, shipping choke‑points and south‑south finance is forcing the G7, the IMF and multinational firms to rethink supply‑chain geometry, capital‑market plumbing and even the grammar of money itself.  This report traces the bloc’s evolution, interrogates the data behind dedollarization, and tests competing theories—from Hegemonic Stability to Complex Interdependence—against the lived economics of 2025.

1.  From acronym to architecture

BRIC began life in 2001 as a sell‑side curiosity.  In April 2009 the first leaders’ summit convened in Yekaterinburg, declaring the dollar‑centric order “out of date.” One decade later the group launched the New Development Bank (NDB) and a Contingent Reserve Arrangement, embryonic twins to the World Bank and IMF.  The 2024 enlargement transformed a loose caucus into the largest energy‑and‑population alliance outside the UN General Assembly, and shifted the centre of gravity decisively toward the Gulf and Eurasia.

Key milestones

Year	Event	Strategic signal
2009	1st BRIC summit	Coordinated post‑GFC critique
2010	South Africa joins	Continental reach
2014	NDB + CRA	Parallel financial toolkit
2023	Kazakhstan summit invites 6 new states	Intent to “institutionalise multipolarity”
2024	Saudi, UAE, Egypt, Iran, Ethiopia join	Control of oil routes + energy finance nexus

2.  Power‑geometry of the new entrants

2.1  Saudi Arabia & the UAE: The petrodollar’s estranged shareholders

Together they pump c. 14 mb/d, manage sovereign wealth exceeding US $2 trn, and supervise critical maritime corridors (Bab‑el‑Mandeb, Strait of Hormuz).  Riyadh’s Vision 2030 and Abu Dhabi’s Operation 300 bn court Chinese capital while hedging against western sanctions risk.  Both states now discuss yuan‑ or dirham‑denominated crude contracts—steps that the International Energy Agency calls “petro‑diversification,” but which markets shorthand as dedollarization.

2.2  Iran & Egypt: Sanctions arbitrage and the Suez gatekeeper

Tehran brings 208 bn bbl of proven crude and experience in sanctions evasion; Cairo controls the Suez, through which 12 percent of global trade passes.  Their memberships give BRICS + leverage over choke‑points previously moderated by NATO partners.

2.3  Ethiopia: Political symbolism, geoeconomic foothold

While its GDP is barely 0.2 percent of the bloc, Addis Ababa chairs the African Union and hosts the UNECA; its inclusion underlines BRICS + ambitions to speak for the “Global South.”

3.  Counting the clout

Population: 3.7 billion, nearly half of humanity.

Output: 36 percent of world GDP (PPP) and 29 percent of global trade, up from 16 percent and 12 percent respectively 20 years ago  .

FX reserves: US $6.5 trn—of which China and the GCC hold roughly four‑fifths.

Energy: ≈46 percent of proved oil reserves (732 bn bbl of a 1.57 trn global total) and >40 percent of natural‑gas reserves  .

Payments rails: CIPS = ¥123 trn settled in 2024, up 17 percent YoY; SWIFT RMB share averages 4–4.7 percent through 2024  .

4.  Dedollarization:  Data or declaration?

4.1  Why dollar inertia is costly

The dollar appears on 88 percent of FX trades and underwrites 40 percent of cross‑border debt  .  But Washington’s use of secondary sanctions (Iran 2018, Russia 2022, China 2024 tech curbs) converts that ubiquity into a policy bludgeon. Political economists from Kirshner to Gopinath label this the “weaponised dollar” problem.

4.2  Instruments of exit

1. Bilateral currency lines:

   • India–Russia: ₹‑denominated oil cargoes now average US $25 bn eq. per quarter, processed largely by Sberbank rupee accounts  .

   • China–Brazil: 17 percent of 2024 merchandise trade (¥195 bn) settled in yuan  .

2. NDB local‑currency lending: 30 percent of the bank’s US $32 bn outstanding portfolio as of December 2024  .

3. Petro‑yuan experiments: Pilot cargoes out of Ras Tanura priced in CNH since Q4 2024  .

4. Crypto workaround:  Russia clears an estimated US $4 bn equivalent of crude via BTC/ETH rails, a tiny share but proof of concept for sanction‑proof settlement  .

4.3  Frictions

Network theory predicts lock‑in effects: dollar markets enjoy unmatched depth (US Treasuries turnover > US $600 bn/day) and legal predictability (New York & English law).  The yuan’s SWIFT share (< 5 percent) and China’s capital controls still deter reserve managers.  Thus dedollarization is incremental, not imminent.

5.  Theoretical lenses

Theory	Prediction	Evidence from BRICS +
Hegemonic Stability (Kindleberger)	System needs a currency hegemon; transition is crisis‑prone.	Tariff wars, IMF forecast downgrades reflect turbulence  .
Power‑Transition (Organski)	Rising coalitions revise rules before parity.	BRICS + calls for UN Security Council reform; proposal of common currency.
World‑Systems (Wallerstein)	Semi‑periphery seeks autonomy from core.	South–South trade corridors, NDB lending in local units.
Complex Interdependence (Keohane & Nye)	Multiple channels constrain conflict.	GCC hedges: still security‑linked to US but finance‑linked to China.
Currency‑Area Optimum (Mundell)	Divergent inflation & capital mobility kill single‑currency dreams.	India’s inflation 6.2 %, Russia 15 %, China 1.3 % in 2024—hurdle to BRICS coin.

6.  Bloc realignments in trade & supply chains

6.1  Commodities

Energy:  The BRICS + energy axis (Russia‑Saudi‑Iran‑UAE) now sets marginal output in OPEC + talks, pushing the Brent corridor toward a ¥‑ and ₽‑priced clearing band.
Critical minerals:  Brazil (niobium, lithium), South Africa (PGMs), Russia (nickel) and China (rare earths) together supply > 55 percent of global demand for the battery economy.

6.2  Manufacturing & services

China’s rising unit‑labour cost (+37 percent 2015‑24) has already catalysed “China + 1.”  BRICS + proposes an alternate: “South × South”—Chinese capital finances Indian, Brazilian, Egyptian and Ethiopian production for southern markets.  The Lancang logistics rail (Kunming–Laos–Port Klang) shortens Middle East–ASEAN routes by 6 days.

6.3  Blocs & counter‑blocs

Bloc	Tools	2025 Action
US‑led G7	Tariffs, IPEF, CHIPS Act II	35 % blanket tariffs on strategic imports (March 2025)
EU	Carbon Border Adjustment Mechanism, Global Gateway	€300 bn infra pledge to Africa to offset Chinese BRI
BRICS +	NDB lending, CIPS expansion, Local‑currency invoices	12 new CIPS nodes in GCC & Africa; local‑currency trade target 25 % by 2027

The risk is tri‑polar trade regionalisation: Western liberal bloc, BRICS‑centred bloc, and a swing periphery (ASEAN, Mercosur).  WTO dispute‑settlement paralysis amplifies the centrifugal pull.

7.  Finance: Plumbing a parallel system

CIPS vs SWIFT

CIPS handled ¥123 trn in 2024—just 1.2 percent of SWIFT volumes—but grew 17 percent YoY and added direct participants in Riyadh and São Paulo.  The EU’s INSTEX never reached operational scale; BRICS + hopes a distributed ledger architecture will.

Sovereign bonds

China’s Panda bond market (CNY‑denominated issuance by foreigners) hit ¥220 bn in 2024.  Saudi’s Public Investment Fund floated a ¥5 bn Panda tranche in October, lock‑in coupon 2.3 %.  Meanwhile, the NDB’s inaugural dirham sukuk drew 3.2× subscription, signalling appetite for non‑dollar supranationals.

Reserves diversification

IMF COFER data show dollar share of official reserves slipping from 58.8 % (Q1 2021) to 54.1 % (Q3 2024)—its lowest since 1995.  Roughly one‑third of that rotation went to “other currencies,” notably the yuan and the Singapore dollar; gold purchases, led by the PBoC and RBI, filled the rest.

8.  Case studies in transactional de‑linkage

8.1  The rupee‑rouble oil corridor

From virtually zero in 2021, Russian oil now supplies 36 percent of India’s crude diet (Q4 2024 average).  Settlement in INR avoided Western banks but left Moscow with a rupee surplus.  Solutions include (i) re‑exporting Indian goods to Russia, (ii) investing rupees in Indian sovereigns, and (iii) crypto conversion—a rehearsal for sanction‑tolerant finance.

8.2  Ras Tanura test cargoes

Aramco priced two 1‑million‑barrel cargoes to Sinopec in CNH, cleared via CIPS and Bank of China, marking the first time Brent‑linked Saudi crude skipped the dollar.  The symbolic volume is < 0.2 percent of Saudi exports yet signposts future share capture.

8.3  Brazil‑China soy corridor in yuan

Brazil’s soy exporters, squeezed by a strong real, accept yuan to hedge Fed‑rate volatility; 2024 contracts reached ¥95 bn, up 22 percent YoY.  Banco do Brasil opened Shanghai clearing, while the NDB structured a ¥12 bn receivables‑backed facility.

9.  Internal contradictions

Geopolitical rivalries:  India‑China border tensions; Iran‑Saudi historical enmity.

Macro divergence:  BRAZIL’s 2024 policy rate 9.5  %; CHINA’s 1‑year MLF 2.60  %; RUSSIA’s 17  %.  A common currency would violate both the Mundell trilemma (free capital, monetary autonomy, fixed rate) and Optimum Currency Area prerequisites.

Governance:  Equal voting in the NDB masks China’s de facto lender‑of‑last‑resort role.  Smaller members fear “yuanization” rather than liberation.

10.  2025–2030 scenarios

Scenario	Probability	Hallmarks	Implications
Gradual Multipolarity	50 %	Local‑currency share of south‑south trade hits 30 % by 2030; dollar still global reserve core	FX hedging costs fall for EMs; parallel settlement rails coexist
Bloc Fragmentation	30 %	G7 extends secondary sanctions to non‑aligned banks; capital controls tighten	Dollar demand spikes during crises; inflation spreads via supply shocks
Rapid BRICS coin Adoption	10 %	Commodity‑backed accounting unit emerges, but only for intra‑bloc trade	Reduced dollar liquidity; volatility in lesser‑traded BRICS+ FX
Stalemate & Reversion	10 %	Internal rifts stall NDB, Saudi re‑aligns with US security pacts	Dollar dominance stabilises; EMs face higher borrowing costs

11.  Conclusion:  The contested commons of money

A multiplex (Acharya) rather than bipolar system appears likeliest.  In it, the dollar retains safe‑asset primacy, the euro and yen hold regional sway, and a yuan‑petro‑crypto mix gains transactional share where sanctions risk or FX volatility bite hardest.  BRICS + will not overthrow the Bretton Woods order in one stroke, but its incremental successes in payments, lending and narrative framing already weaken the monopoly‑circuits that endowed Washington with an “exorbitant privilege.”  For firms, investors and policymakers, that means mastering multi‑currency cash‑flow modelling, tracking emerging‑market capital controls in real time, and engaging with new south‑south legal standards—from digital ID in India to ESG‑Islamic hybrid bonds in the Gulf.  History teaches that hegemonic transitions are messy; data show this one is already under way.  The task ahead is to navigate, not deny, the new geography of money.