China’s Role Crucial in Establishing the Viability of a BRICS Currency — But at What Cost?

The idea of a BRICS currency has been floating around for years, but lately it’s picked up steam. With over a dozen countries knocking at the door to join the bloc, it’s no longer just a geopolitical side project — it’s quickly becoming a serious alternative to the dollar-dominated financial order. But according to Herbert Poenisch — a former BIS economist and senior fellow at Zhejiang University — if this thing is going to get off the ground, it’s going to need one big engine: China.

Poenisch laid it out clearly in a recent OMFIF piece. In short: if BRICS wants a unified currency that’s more than just a political statement, it has to start by pegging everything to the renminbi. Why? Simple. China’s trade footprint is massive across all BRICS nations. Whether it’s Brazilian soybeans, Russian oil, or Indian pharmaceuticals, chances are a decent chunk of it is being sold to or bought from China. That trade gravity gives Beijing enormous leverage — and responsibility.

The recent meeting of BRICS foreign ministers — which also included reps from Iran, Egypt, the UAE, and Saudi Arabia — wasn’t just another talk-fest. There’s real momentum here. Over 19 countries are lining up to join the club, and that brings one huge headache: coordination. Different systems, different economies, different politics. Not easy.

Poenisch points out that while countries like Russia and Brazil have tried to settle trade in their own currencies, the system tends to break down once imbalances kick in. That’s where a shared currency would help. But this isn’t going to be another euro — not any time soon. Think more of a “BRIC-euro-lite.” It would sit alongside the dollar system, not replace it. The greenback isn’t going anywhere.

The roadmap? Peg currencies to the renminbi, align exchange rates, and build something like a BRICS version of the old European Payments Union. China would play the central role, acting like a clearinghouse — managing surpluses, filling liquidity gaps, and making sure the whole machine doesn’t seize up. Of course, that means opening up the renminbi, making it more freely convertible, and easing capital controls — all stuff Beijing is famously cagey about.

For China, this isn’t just about power projection. If it steps up, it risks accelerating the liberalization of its financial account — something the Communist Party has dragged its feet on for years. But without it, a BRICS currency probably doesn’t happen.

So while everyone loves to talk about de-dollarization, the truth is, a BRICS currency isn’t just about ditching Washington. It’s about how far Beijing is willing to go to make itself the financial backbone of the Global South. Until China takes that leap, this currency union will stay exactly where it’s been for years — on the drawing board.