Pennings, A.J. (2026, Sep 26) BRICS in the USD-Tiered Global Economy. apennings.com https://apennings.com/global-e-commerce/brics-in-the-usd-tiered-global-economy/

Introduction

BRICS began as an investment-category acronym coined by Goldman Sachs economist Jim O’Neill in a 2001 research paper titled “Building Better Global Economic BRICs.” It originally referred to Brazil, Russia, India, and China, the four large, fast-growing emerging economies that O’Neill argued would become increasingly important drivers of global growth and should gain greater weight in international economic governance.

In this post, I examine BRICS in the context of the global USD (US dollar + Eurodollars, including petrodollars) infrastructure, suggesting a tiered approach to differentiate countries’ positions in the world system. I end by noting the incoming proliferation of US treasury-pegged stablecoins that threaten the BRICS’ move toward an independent currency infrastructure.[1]

A follow-up 2003 Goldman Sachs paper, “Dreaming with BRICs: The Path to 2050,” projected that these economies could collectively rival or overtake the major developed economies in size over coming decades. At this stage, BRIC was purely an analytical and investment concept used by fund managers, analysts, and corporations to group high-potential markets. It carried no formal political or institutional structure.

The countries themselves gradually appropriated the label and transformed it into a multilateral political grouping. Foreign ministers of the four BRIC nations began meeting in 2006 on the sidelines of the UN General Assembly. The first formal leaders’ summit took place in Yekaterinburg, Russia, in June 2009. South Africa was invited to join in 2010 (effective for the 2011 summit), turning the acronym into BRICS and adding an African voice. Over subsequent years the group institutionalized cooperation through annual summits, the creation of the New Development Bank (NDB), established in 2014 and headquartered in Shanghai to finance infrastructure and sustainable development, and the Contingent Reserve Arrangement as a financial safety net.

In the 2020s, BRICS pursued significant expansion to strengthen its claim as a representative platform for the Global South and a counterweight to Western-dominated institutions. Egypt, Ethiopia, Iran, and the United Arab Emirates became full members in 2024; Indonesia joined in 2025. Saudi Arabia’s status has remained somewhat ambiguous (invited and often listed, but with incomplete formal ratification in some accounts).

By 2026, the group was commonly described as an 11-member bloc, supplemented by a growing tier of “partner countries.” It remains an informal intergovernmental forum without a founding treaty or permanent secretariat, focused on economic cooperation, development finance, calls for reform of the IMF, World Bank, and UN, and broader multipolar governance discussions.

In short, BRICS emerged from Wall Street shorthand for promising emerging-market investment destinations into a multilateral grouping of major non-Western economies led by Russia and China, seeking greater influence in global affairs.

BRICS countries occupy different positions across the liquidity tiers shown in the chart above, creating both complementary relationships and internal tensions that shape their collective potential in renewables and AI for national development.

China stands out as the clearest Tier 3 (Surplus) member and most enmeshed in the world’s USD system. Its large foreign-exchange reserves, persistent current-account surpluses, and role as a major hardware and clean-technology exporter allow it to fund large-scale deployments at home and abroad while recycling surpluses back into the dollar system. A global trading system of USD allows for relatively easy trade with any country in the world without worrying about excessive transaction costs.

This positions China as a supplier of solar panels, batteries, electric vehicles, and increasingly ICT-related hardware and solutions to other BRICS members. Many of these countries want to take advantage of younger populations and lower wages to compete with an older China.

The UAE and, to a significant extent, Saudi Arabia (depending on the exact status of its membership) also function as Tier 3 surplus recyclers thanks to energy revenues; they can finance projects and import technology while remaining integrated into global dollar liquidity.

India, Brazil, South Africa, Egypt, Ethiopia, and Indonesia largely fall into Tier 4 (Emerging). These economies experience boom-period capital inflows through Eurodollar channels that can accelerate investment in renewables and digital infrastructure, followed by the characteristic risks of sudden stops, currency pressure, and procyclical setbacks.

Their relationship with Tier 3 members is therefore often one of importer and project host. For example, they absorb Chinese (and to a lesser degree Gulf) capital goods, engineering capacity, and financing, while offering markets, critical minerals, or renewable resources in return. This creates a division of labor inside BRICS where surplus members supply scale and hardware, while emerging members supply demand, deployment opportunities, and sometimes raw materials. However, it also reproduces classic center-periphery dynamics within the group itself.

Russia occupies a more ambiguous and constrained position. As a major commodity exporter it has surplus characteristics, but sanctions and restricted access to Western financial plumbing push it toward the edges of Tier 3 or into selective Tier 4/5-like isolation from parts of the dollar/Eurodollar system. However, it also reproduces classic center-periphery dynamics within the group itself.

Increasing sanctions after the takeover of Crimea and the special military operation (SMO) incursion into Ukraine have motivated the Russia to push the BRICS towards an alternative currency/payment system. Progress have been made towards bilateral payment rails but the US and the West is too lucrative a market to risk losing access to SWIFT and other USD benefits.

Iran faces even sharper exclusion, especially after the new battle for control of the Strait of Hormuz. These constraints limit their ability to intermediate or recycle liquidity smoothly and make them more dependent on non-dollar workarounds or bilateral arrangements with China. Trading oil for yuan at a discount is less desirable than the USD’s general liquidity.

The chart’s Tier 1 (US) and Tier 2 (Eurodollar hubs) remain external to BRICS, yet they form the systemic backdrop against which intra-BRICS relationships play out. When global dollar liquidity is abundant, Tier 4 BRICS members can accelerate green and AI-related investments, often financed or equipped by Tier 3 members. When liquidity tightens, the same members face sharper funding costs and project delays, while Tier 3 exporters may see demand for their hardware soften.

This shared exposure to the dollar cycle gives BRICS a common interest in exploring alternative payment systems, local-currency settlement, and the New Development Bank as partial buffers. Yet, the very different degrees of surplus versus vulnerability inside the group make deep monetary coordination difficult.

Potential Impact of US Stablecoins on China and Other BRICS Trading Strategies

US dollar-backed stablecoins (USDT, USDC, and others, which make up the vast majority of the stablecoin market) are a double-edged development for BRICS countries. They reinforce dollar reach as stablecoins extend dollar liquidity into regions and use cases where traditional correspondent banking is slow, expensive, or restricted.

They also enable faster, cheaper cross-border payments and remittances while remaining firmly pegged to the dollar and often backed by US Treasuries. For many BRICS traders and firms, this can mean more rather than less dollar exposure in digital form.

Stablecoins challenge de-dollarization narratives. When Brazilian, Indian, Emirati, or African counterparties settle in USDT/USDC, they bypass some US bank rails and SWIFT messaging but still transact in a dollar instrument. This undercuts pure local-currency or renminbi strategies and can accelerate “stealth dollarization” in emerging markets.

Beijing views widespread dollar stablecoin adoption as a threat to monetary control and renminbi internationalization. China maintains strict domestic crypto restrictions while promoting the e-CNY, CIPS, and exploring Hong Kong dollar or offshore yuan-linked stablecoins/digital instruments as controlled alternatives. Some Chinese exporters already use dollar stablecoins pragmatically for certain restricted or hard-to-bank counterparties, converting them onshore.

Stablecoins offer efficiency gains that appeal to traders in India, Brazil, the Gulf, and Africa, potentially slowing the shift to pure local-currency systems. At the same time, they increase the urgency for BRICS to improve interoperability of national payment systems, CBDCs, and non-dollar stablecoin or tokenized solutions. The net effect so far is mixed: stablecoins make the dollar more accessible and sticky in digital channels, while giving BRICS members additional incentive to build parallel infrastructure.

In summary, BRICS remains deeply integrated into the USD/Eurodollar system as both users and (in China’s case) major suppliers/recyclers of dollars. De-dollarization efforts have produced meaningful bilateral progress, especially with Russia, but have not displaced the dollar’s systemic role.

US stablecoins complicate this picture by extending dollar functionality into the very digital and emerging-market spaces where BRICS seeks greater autonomy, forcing China and other members to accelerate their own digital currency and payment-system strategies while still navigating a dollar-centric global environment.

References

O’Neill, Jim. “Building Better Global Economic BRICs.” Goldman Sachs Global Economics Paper No. 66, 2001.
Wilson, Dominic, and Roopa Purushothaman. “Dreaming with BRICs: The Path to 2050.” Goldman Sachs, 2003.
Official BRICS summit declarations and New Development Bank documentation (2009–2026).
Reporting and analyses on BRICS expansion (2023–2026), including membership of Egypt, Ethiopia, Iran, UAE, Indonesia, and the status of Saudi Arabia.
Contemporary analyses of Eurodollar/USD liquidity hierarchies and emerging-market capital flow cycles as they apply to major BRICS economies.
On Eurodollar suppliers and the offshore dollar market Federal Reserve Bank of New York, Liberty Street Economics: “Who Is Borrowing and Lending in the Eurodollar and Selected Deposit Markets?” (2024).

Notes

[1] The USD is not strictly a US currency, although it still maintains the most regulatory control over it through the Treasury and the Federal Reserve.
[2] Other Tier 3 (Surplus) countries — those with structural current-account surpluses, large foreign-exchange reserves, and the capacity to recycle capital into the dollar system while funding exports or large-scale deployments — typically include: Japan, Germany, South Korea, Taiwan, Singapore, Switzerland, Netherlands, and Norway. Surplus nergy and resource surplus economies including Saudi Arabia (already noted in BRICS context), United Arab Emirates (already noted) Kuwait, Qatar, and other select Gulf exporters. Additional notable surplus/reserve holdersHong Kong SAR
Denmark and Sweden (smaller but persistent surpluses)
These economies generally match the Tier 3 profile in the chart: they run surpluses that support reserves, export manufactured goods, technology, energy, or financial services, and recycle a significant portion of those surpluses into dollar-denominated assets. China remains the largest single Tier 3 player by a wide margin; the countries listed above constitute the main additional members of this group.

AI Prompt(s) Describe BRICS and its history as an investment category turned multi-lateral group.

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Not to be considered financial advice. AI is often used, and results are thoroughly interrogated. Links are used for some citations. Views are my own and do not express the stances of my employers, past or present.

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Anthony J. Pennings, PhD is a Professor at the Department of Technology and Society, State University of New York, Korea and a Research Professor for Stony Brook University. He teaches AI and broadband policy. From 2002-2012 he taught digital economics and information systems management at New York University. He also taught in the Digital Media MBA at St. Edwards University in Austin, Texas, where he lives when not in Korea.

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Category: ai4d, artificial intelligence, blockchain, financial technology, food policy and security, global communications, global e-commerce, mobile technologies, sustainable development, telecom policy and net neutrality
Tags: BRICS > Goldman Sachs economist Jim O’Neill > New Development Bank (NDB) > USD tiers

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