On 6 July 2026, standing in Jakarta, Narendra Modi and Indonesian officials operationalised a framework letting India and Indonesia settle bilateral trade directly in rupees and rupiah, no dollar conversion required. Officials on both sides described it, on the record, as part of “a measured approach rather than an outright rejection of the dollar.” That sentence tells you more than anything likely to be said at September’s BRICS summit in New Delhi, where the bloc plans to unveil BRICS Pay, a system stitching together Russia’s SPFS, China’s CIPS, India’s UPI and Brazil’s Pix into what most coverage will call a dollar-killer. Indonesia is the country to watch, not because it is defecting from the dollar system, but because it isn’t. It joined BRICS as a full member in January 2025. It is also, at the same time, actively pursuing membership of the OECD — the club built around Washington, Ottawa and London.
BRICS Pay is real: it links national payment rails so member states can settle trade without routing through dollar correspondent banks, and the bloc behind it — eleven full members plus ten partner states after 2025’s expansion — now accounts for roughly 41% of global GDP on a purchasing-power basis and 45% of the world’s population. The framing in nearly every outlet covering it is a dollar-threat story: sanctions-proofing for Russia, insulation for China, a slow-motion assault on US financial leverage. The actual test of that framing sits in a number the BRICS Pay coverage rarely mentions. The dollar’s share of global central-bank reserves, tracked quarterly in the IMF’s COFER data, stood at 57.13% in the first quarter of 2026 — down from a 71% peak in 2000, but still above 50%, a level it has not once dropped below in a quarter-century of gradual, not collapsing, decline.
The right question about BRICS Pay is not whether the bloc is building dollar alternatives. It obviously is. The right question is which of its members are actually shifting reserve behaviour, and which are simply adding a parallel lane for specific trade while leaving their underlying financial architecture untouched. Once you look at the countries actually using the new rails, almost none of them are doing the former.
Indonesia is the clearest case. It became the first Southeast Asian nation to join BRICS as a full member, in January 2025, and it is simultaneously an active OECD applicant — a strategy that mirrors Thailand’s, which is pursuing both memberships at once too. Its local-currency trade with India specifically surged 163% year-on-year, reaching $8.45 billion in the first two months of 2026 alone, a genuinely fast-growing number. But that growth sits inside one bilateral corridor, built on a settlement mechanism first agreed in March 2024 and only operationalised this July. It is not a shift in how Jakarta holds its reserves. Indonesia’s own foreign ministry called the country’s foreign policy “independent and active,” a formula flexible enough to justify sitting in both blocs at once without contradiction.
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The UAE shows the same pattern from a different angle. Abu Dhabi has run a rupee-dirham local currency settlement system with India since July 2023, giving exporters and importers on that specific corridor a way to invoice and settle without a dollar leg. At the same time, the UAE dirham remains rigidly pegged to the US dollar at a fixed rate of 3.6725, a peg the central bank has repeatedly said it has no plan to abandon. A country cannot be described as fleeing the dollar system while it keeps its own currency’s value legally defined in dollars. What the UAE has done is cut transaction costs and sanctions exposure on one trade relationship, not altered its monetary anchor — the same distinction Indonesia is drawing, from the opposite direction.
The strongest objection to reading this as hedging rather than transition is a historical one: reserve currencies have never lost their status overnight, and sterling’s decline after 1945 also looked, for years, like narrow substitution before it became systemic. That comparison assumes a viable alternative reserve asset is quietly accumulating in the background, the way dollar holdings quietly built up as sterling’s replacement mid-century. No such accumulation is visible here. The yuan, the most obvious BRICS reserve candidate, remains capital-account-restricted and thinly traded outside trade settlement, and no BRICS member is building yuan, rupee or rand reserves at any meaningful scale. What they are accumulating is savings on transaction costs and insulation from sanctions on specific flows — a real and valuable thing, but not a step toward holding a different asset as a store of value. It is also worth noting how steady the COFER decline actually is: seven percentage points over nine years works out to well under a point a year, a pace that has not moved even as BRICS Pay, the New Development Bank and repeated de-dollarization summits have all been announced in the interim.
This is what most BRICS Pay coverage gets backwards. It measures the wrong variable — summit announcements, new payment links, participant counts — when the more honest measure sits in COFER data, currency-peg commitments and the fact that BRICS’s own newest full member is applying to join the West’s club at the same moment. By that measure, the real story of 2026 is not de-dollarization. It is middle powers getting better at extracting savings from two financial systems at once, rather than picking one.
What to watch for next
Base case (roughly 60% likely): local-currency corridors keep multiplying in narrow, specific trade lanes — more bilateral arrangements on the India-Indonesia and India-UAE model, each announced with real percentage-growth numbers that sound dramatic in isolation — while the dollar’s reserve share continues its slow multi-decade drift downward by a point or so a year, not a collapse. BRICS Pay launches at the September summit with genuine transaction volume but functions as a settlement layer rather than a reserve currency, and states such as Indonesia and Thailand keep both their BRICS and OECD tracks open rather than choosing.
Downside for the dollar: a specific shock, such as a fresh sanctions episode that freezes a BRICS member’s dollar reserves outright, following the precedent set with Russia, forces even hedging states to treat reserve diversification as self-preservation rather than optimisation, since the corridor-level tools they have already built could suddenly be repurposed at scale. Watch for whether any G20-adjacent state whose reserves are not currently under sanction begins visibly reducing, rather than merely diversifying the settlement currency of, its dollar reserve holdings in response.
Upside for the dollar, and the least discussed possibility: BRICS Pay’s own success at cutting transaction costs on specific corridors could relieve the political pressure on member governments to go further, because businesses get the practical benefit — lower currency-conversion friction, sanctions insulation on particular trade lines — without governments having to accept the volatility and reduced liquidity that come with real reserve diversification. Dollar dominance could end up reinforced precisely because the alternative rail works well enough at the narrower job it is actually doing, taking the political pressure off before it ever reaches reserve managers’ desks.
The countries building BRICS’s payment infrastructure are demonstrating, in real time, that using an alternative settlement rail and abandoning the dollar are two different decisions — and most of them are making the first while carefully declining the second. Indonesia’s dual BRICS-OECD track and the UAE’s dollar-pegged dirham are not contradictions to be explained away. They are the policy, stated plainly by the officials running it.
Watch for: the next IMF COFER release after BRICS Pay’s formal September launch. A continued slow drift in the dollar’s reserve share, rather than any visible acceleration, will be the confirmation that hedging, not defection, remains the dominant strategy among BRICS’s own members — whatever the summit press releases say.
