An op-ed published on Business Insider by writer Huileng Tan delves into efforts led by the BRICS group in advocating for a move away from US dollar dominance.

Last year, Brazilian President Luiz Inácio Lula da Silva proposed a common BRICS currency, though this idea faced skepticism from economists.

The practicality of establishing a common currency is challenging; instead, the bloc has focused on increasing trade and lending in local currencies to diminish reliance on the dollar.

Christopher Granville, managing director of global political research at GlobalData TS Lombard, suggested that discussions on reducing dollar dependence might gain momentum during the BRICS summit in Kazan, Russia, scheduled for October 22-24.

This comes amid rising tensions between the US and China, and secondary sanctions by Washington on banks processing payments involving Russia, even in local currencies like the Chinese yuan.

A significant development in this context is the interest of central banks in digital-currency transfers. Granville noted that a potential systemic solution involves a platform from the Bank for International Settlements (BIS) that facilitates direct, peer-to-peer settlements of commercial invoices and foreign-exchange trades using central-bank digital currencies (CBDCs).

These currencies are akin to cryptocurrencies but are issued and backed by central banks. In 2022, central banks from China, Hong Kong, the UAE, and Thailand participated in a BIS trial of this system, although it is not yet operational.

Read more: US dollar shares shrink in global reserves amid de-dollarization trend

Russian Foreign Minister Sergey Lavrov has promoted a digital-currency-based settlement system, which Granville interprets as an indication that central banks are considering a "US-insulated" solution.

This solution seems particularly relevant for China amidst its trade conflict with the US, as China already has a well-developed digital currency, the digital yuan, used domestically for various payments.

However, the BIS suspended the Russian central bank's membership following Russia's launch of its special military operation in Ukraine in 2022, creating uncertainty about how Russia would participate in the digital-currency platform.

Despite this, Granville argues that the involvement of other central banks in a CBDC system could challenge the US dollar's dominance in international payments.

The US dollar accounted for 60% of international payments outside the eurozone in 2023, down from its 80% share in trade finance and 60% in global foreign-exchange reserves.

Read more: Russia, China reach near complete de-dollarization in bilateral trade

Another recent report by Business Insider detailed that while the West cannot fully isolate Russian banks from the SWIFT messaging network due to the adverse impact on trade finance, reducing the US dollar's share in international payments through a non-dollar CBDC platform could undermine one of the pillars of the dollar's global reserve currency status.

This shift could weaken the dollar's role in cross-border payments, even though trade finance and FX reserves remain more critical.

Despite the potential benefits, implementing central-bank digital currencies faces challenges. Even China, with one of the most advanced digital currencies, employs a "two-tier" system where banks act as wallet-holding agents to prevent disruption to the financial sector and maintain stability.