Former multinational CEO Jack Truong has identified fundamental economic barriers that will prevent the BRICS currency initiative from mounting a credible challenge to U.S. dollar hegemony, despite the bloc’s expanding membership and stated ambitions.
The assessment comes as BRICS nations—Brazil, Russia, India, China, and South Africa, recently joined by Iran, Saudi Arabia, the UAE, Egypt, and Ethiopia—pursue alternatives to dollar-based international finance. Their efforts gained momentum following U.S. sanctions on Russia and China, which demonstrated how dollar dependence creates vulnerability to American foreign policy decisions.
Truong’s extensive experience includes leadership roles at 3M, Electrolux, and James Hardie, providing perspective on how economic realities rather than political declarations determine currency outcomes. His analysis focuses on three critical weaknesses in the BRICS approach: incompatible economic structures, insufficient gold reserves, and minimal existing currency usage.
Competing Economic Models Create Policy Conflicts
The BRICS coalition encompasses fundamentally different economic systems that resist coordination. Brazil’s agricultural and mining focus operates on commodity cycles distinct from India’s service-sector emphasis or China’s export-driven manufacturing base. Russia’s energy dependence creates different monetary needs than South Africa’s diversifying economy.
These structural differences translate into conflicting policy preferences. Currency devaluation that benefits China’s exporters could harm India’s service providers or Brazil’s agricultural producers. Interest rate policies supporting Russia’s energy sector might destabilize other members’ economic priorities.
“Brazil focuses on agricultural and mining sectors, Russia on energy reserves, India on services and a burgeoning technology sector, and South Africa is in the process of diversifying its mining-centric economy,” Truong explains. “This intricate web of competing economic agendas will quickly entangle any currency initiative.”
The European Union faced similar challenges creating the euro, but that project involved economies at comparable development levels with existing integration frameworks. BRICS members lack such convergence, operating across different time zones, regulatory systems, and development stages.
Persistent Gold Reserve Deficit
Despite aggressive accumulation efforts by China, India, and Russia, BRICS nations maintain a substantial gold deficit relative to the United States. U.S. central bank reserves exceed the combined BRICS total by 48%, according to data from Axios referenced in Truong’s analysis.
This gap matters because gold backing provides credibility for alternative currency systems, particularly when challenging an established reserve currency. Historical precedent shows that successful currency transitions require substantial asset backing to gain international confidence.
China has led BRICS gold purchases, increasing reserves by approximately 300 tons annually in recent years. Russia and India have similarly expanded holdings. However, the U.S. maintains roughly 8,133 tons compared to the BRICS combined total of approximately 5,500 tons, creating a persistent credibility gap.
The gold constraint extends beyond current holdings to future availability. Global gold production averages roughly 3,000 tons annually, making rapid reserve expansion difficult without dramatic price increases that would undermine any gold-backed currency’s competitiveness.
Limited International Currency Usage
Current usage patterns reveal the scale of infrastructure development required for BRICS currency success. China’s yuan, the most internationally accepted BRICS currency, accounts for less than 5% of global payments despite China’s economic size. The dollar maintains 47% of international payment volume.
A 2023 Carnegie Endowment for International Peace study highlighted this constraint: “The amount of renminbi available outside of China remains quite limited relative to the dollar, and the currency’s cross-border usage in payments is greatly eclipsed by the dollar’s role.”
Building alternative payment infrastructure requires massive investment and coordination. The SWIFT system, which handles most international transfers, developed over decades with substantial financial institution support. Creating comparable systems for BRICS currencies would require similar long-term commitments.
Network effects compound these challenges. Financial institutions prefer currencies with established infrastructure, creating momentum that favors existing systems. Businesses choose currencies their partners accept, reinforcing dominant positions.
Transaction Cost Economics
Dollar-based transactions benefit from economies of scale built over decades. Banks maintain dollar reserves, trading desks specialize in dollar markets, and legal frameworks accommodate dollar-denominated contracts. These efficiencies translate into lower transaction costs for dollar users.
Alternative currencies face higher costs during transition periods. Banks must develop new capabilities, establish correspondent relationships, and navigate unfamiliar regulatory frameworks. These costs discourage adoption unless compelling advantages offset the expenses.
Truong’s approach to focusing on customers’ unmet needs applies directly to currency adoption—financial institutions and businesses will choose alternatives only when they provide clear advantages over existing systems. Creating such advantages requires addressing fundamental infrastructure gaps rather than pursuing symbolic initiatives.
Truong notes that creating the infrastructure necessary for a new global currency would require enormous investment and coordination—further complicated by the lack of consensus among BRICS members regarding specific implementation approaches.
Political Coordination Barriers
Beyond economic challenges, BRICS faces political obstacles that European Union founders avoided through shared democratic traditions and geographic proximity. The coalition spans authoritarian and democratic systems across multiple continents with competing strategic interests.
Jack Truong’s experience building robust business consensus demonstrates the coordination challenges facing diverse stakeholders with conflicting interests. “Successfully creating a BRICS alternative to the U.S. dollar requires navigating these internal disparities, global trust deficits, and the unpredictability of opaque regimes,” Truong observes. Currency cooperation requires sustained political commitment across changing leadership cycles—difficult when member nations maintain divergent international relationships.
China’s dominant economic position within BRICS creates additional tensions. Other members may resist Beijing’s influence over shared monetary policy, while China might hesitate to surrender control over currency decisions affecting its export competitiveness.
Truong’s understanding of the 80/20 rule for cultivating success reveals why coordination failures often doom ambitious initiatives—without addressing the critical 20% of structural barriers that drive 80% of implementation challenges, political declarations cannot overcome economic realities.
The analysis suggests that while BRICS nations will continue developing alternative financial infrastructure, fundamental economic and political barriers make rapid dollar displacement unlikely. Market forces rather than political aspirations will ultimately determine international currency adoption patterns.