why brics?
why RMB?
why CIPS?
why SWAP LINES?
why brics?
why RMB?
why CIPS?
why SWAP LINES?
Click on the red dots to learn more about the underlying data.
Egypt
What is happening?
Why is it happening?
Why it's happening
What will happen next?
Egypt has struggled to access global capital markets and is facing a severe dollar shortage, which has been exacerbated by the pandemic and conflict since 2020. Denominating imports in non-dollar currencies alleviates pressures on dollar reserves, while approaching non-traditional debt markets could attract new investors.
What is happening?
Why is it happening?
What will happen next?
What do we expect
Cairo has already announced its intention to issue a new round of samurai bonds and will continue finding innovative ways to engage new debt markets. It will be open to settling imports in non-dollar currencies, including renminbi, to preserve dollar reserves. But major policy changes that could complicate negotiations with the International Monetary Fund (IMF), on which Cairo is relying to maintain macroeconomic stability, are unlikely in the near term.
What is happening?
Why is it happening?
What will happen next?
Egypt is taking steps to diversify its currency portfolio in import financing and in its debt sources. Egypt and China have twice renewed their swap line and Egypt is considering deeper financial coordination with Russia, on which it relies for wheat imports. Cairo has also issued a series of renminbi-denominated “panda bonds” and yen-denominated “samurai bonds” over the last three years to tap into new debt markets.
Swap Lines: $2.63b
In December 2016 the PBOC and the Central Bank of Egypt signed a currency swap agreement of RMB 18 billion yuan/EGP 47 billion valid for 3 years.
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
South Africa
What is happening?
Why is it happening?
What will happen next?
South Africa maintains bilateral swap lines with China and participates in CIPS through Chinese bank branches in the country. The use of renminbi for South Africa’s trade with China significantly increased after these relationships were established in 2015. However, the dollar decidedly remains the dominant currency in South Africa’s global trade.
What is happening?
Why is it happening?
Why it's happening
What will happen next?
South Africa is a leading global commodities exporter, and, as of 2017, invoiced 52 percent of its exports in dollars. Pretoria aims to hedge against its vulnerability to exchange rate fluctuations.
What is happening?
Why is it happening?
What will happen next?
What do we expect
South Africa will continue to support efforts that increase the use of national currencies in international trade through BRICS. In 2025, South Africa will host the G20 and will likely avoid the "anti-dollar" narrative, instead focusing on enhancing existing payment systems.
read the FULL assessment
Swap Lines: $4.8b
South Africa made a swap line deal with China in 2015, and renewed in 2018 and 2021.
Three Participating Institutions
- Bank of China Limited (Johannesburg)
- China Construction Bank Corporation (Johannesburg)
- Bank of Communications Co.,Ltd. (Johannesburg)
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
Indonesia
What is happening?
Why is it happening?
What will happen next?
More than 80 percent of Indonesia's import trade and 90 percent of its export trade are conducted in US dollars. As significant trading partners, Indonesia and China have established multiple frameworks to facilitate the use of the rupiah and renminbi in bilateral trade and transactions. Indonesia has also implemented local currency transactions with many countries including Thailand, Malaysia, China, and Japan. In January 2025, Indonesia became the latest member to join the BRICS bloc, and says it is moving in the same direction as BRICS on diversification away from the dollar.
What is happening?
Why is it happening?
Why it's happening
What will happen next?
Indonesia is heavily dependent on imports of raw materials and export revenues from commodities, most of which are denominated in dollars. This makes Indonesia particularly vulnerable to global financial markets and dollar fluctuations. In response, Indonesia is pivoting away from the dollar in hopes of stabilizing its trade and currency environment. When the dollar strengthens, Indonesia’s debt repayments and import costs can surge, creating a scenario where the country has to spend more rupiah to meet its dollar-denominated commitments, weakening the rupiah. Additionally, Indonesia is part of broader ASEAN initiatives that promote regional payment connectivity to strengthen financial resilience and increase intra-regional trade.
What is happening?
Why is it happening?
What will happen next?
What do we expect
Indonesia will continue to establish bilateral local currency trading arrangements with regional partners while also participating in broader ASEAN initiatives to enhance regional payment connectivity and reduce dollar dependency. In 2023, Indonesia launched a task force focused on de-dollarization, aiming to boost the use of regional currencies in trade. The initiative involves improving cross-border payment systems and signing Memorandums of Understanding (MoUs) with countries such as India and South Korea to facilitate more trade settlements in local currencies. Although progress has been limited so far, Indonesia's recent inclusion in BRICS could enable it to capitalize on the group’s efforts to develop new trade channels outside the dollar.
read the FULL assessment
Swap Lines: $34b
Indonesia and China renewed their currency swap agreement in 2022, extending it for three more years. This deal aims to enhance financial stability and facilitate trade between the two nations by allowing more direct currency exchanges.
Three Participating Institutions
- Bank of China, Jakarta Branch
- Industrial and Commercial Bank of China, Jakarta Branch
- China Construction Bank, Jakarta Branch
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
Ethiopia
What is happening?
Why is it happening?
Why it's happening
What will happen next?
Ethiopia does not export oil or natural resources to China at the scale that Russia does, which might be why it cannot (and does not need to) circulate renminbi in its financial system the way other BRICS members do, and also why swap lines would not be useful for Ethiopia. China’s relatively low volume of trade and transactions with Ethiopia could also explain why CIPS has not expanded to Ethiopia (at least for now). CIPS is used to clear and settle renminbi-denominated transactions, and if Ethiopia does not rely on renminbi for transactions at a scale that other BRICS members do, Ethiopia has no reason to link its banks with CIPS.
What is happening?
Why is it happening?
What will happen next?
What do we expect
Ethiopia does not have the energy or natural resources to export to China at a large scale, and without this element, it’s not worth it for Ethiopia to adopt the renminbi for trade or reserves. Additionally, given the strain costly Chinese loans have put on Ethiopia’s financial system, Ethiopia might not be all too eager to strengthen financial cooperation with China, and instead might forge closer ties with other BRICS members.
What is happening?
Why is it happening?
What will happen next?
Ethiopia does not have a bilateral currency swap agreement with China, nor does it have a bank directly participating in CIPS. There are no reports indicating Ethiopia’s widespread adoption of the renminbi for trade or reserves, which aligns with the fact that there are no swap lines or CIPS direct member banks in Ethiopia.
Swap Lines: $.82b
Ethiopia and China signed a swap agreement in September 2024
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
Iran
What is happening?
Why is it happening?
Why it's happening
What will happen next?
Iran has increased its use of non-dollar currencies to ensure access to foreign exchange reserves and essential imports amid Western economic and financial sanctions. In 2018, these measures blocked Iranian foreign reserves held in foreign accounts, and disconnected the CBI and Iranian financial institutions from SWIFT. To bypass US and European Union sanctions, it is likely that Iran has increased its share of reserves denominated in renminbi and has used the currency to purchase essential imports from China.
What is happening?
Why is it happening?
What will happen next?
What do we expect
Iran will likely continue to use the renminbi for transactions with China. However, as the renminbi is not fully convertible, Iran is unlikely to expand use of the currency with other trading partners. Additionally, the PBOC and major Chinese state-owned banks are unlikely to risk US financial sanctions by processing Iranian oil payments or by opening renminbi-clearing facilities in Iran. Instead, Iran may expand its trade settlement and financial infrastructure with other non-dollar currencies such as the lira, rupee, and ruble.
What is happening?
Why is it happening?
What will happen next?
Iran has worked with Russia and the Asian Clearing Union to promote alternatives to the SWIFT messaging system and has pursued trade settlement in the rial, renminbi, ruble, and rupee. However, the Central Bank of Iran (CBI) has not established a swap line with the People’s Bank of China (PBOC), and there are currently no Iranian financial institutions that are direct or indirect participants in CIPS.
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
United Arab Emirates
What is happening?
Why is it happening?
What will happen next?
The United Arab Emirates (UAE) has pursued bilateral currency deals with large emerging markets. China, India, and Russia in particular are keen to take advantage of the UAE’s finance markets and the dirham’s free convertibility to the dollar at a fixed exchange rate. In 2023, the UAE completed its energy deals in local currencies with both India and China. The UAE is also a full-member of the mBridge Project, which recently piloted cross-border renminbi payments using CBDCs.
What is happening?
Why is it happening?
Why it's happening
What will happen next?
The UAE is primarily driven by its goal of doubling its GDP by 2030. Local currency deals with large energy import markets allow the UAE advantaged access to their markets. Moreover, a series of frictions have emerged in US-UAE relations since Russia’s invasion of Ukraine, with the United States warning the UAE to quash any Russian attempts at sanctions evasion.
What is happening?
Why is it happening?
What will happen next?
What do we expect
The UAE maintains a peg to the dollar and must also maintain large and liquid dollar reserves to support the dirham’s value. In the absence of deep financial markets in the UAE, free convertibility and fixed exchange rates are the primary drivers of dirham use in trade. It is not in the UAE’s interest to pursue significant “anti-dollar” efforts, and trade partners will likely not be as willing to engage with dirhams if its connection to the dollar is weakened.
read the FULL assessment
Swap Lines: $4.89b
In November 2023, China and the UAE signed a five-year currency swap agreement worth $4.89 billion.
Five Participating Institutions
- Bank of China (Dubai) Branch
- Bank of China Ltd.-Abu Dhabi
- Agricultural Bank of China (Dubai Branch)
- Agricultural Bank of China (DIFC Branch)
- Industrial and Commercial Bank of China Limited Abu Dhabi Branch
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
Brazil
What is happening?
Why is it happening?
What will happen next?
Brasilia is supporting the expansion of infrastructures that advance the renminbi’s role in the economy. The Banco Central do Brasil (BCB) has established a swap line with the People's Bank of China (PBOC) and announced a renminbi clearing house in Brazil to facilitate trade in local currencies with China. Nevertheless, the dollar remains entrenched in Brazil’s foreign exchange reserves and export settlement.
What is happening?
Why is it happening?
Why it's happening
What will happen next?
Brazil seeks to limit exposure to adverse US monetary policy and dollar fluctuations that cause trade volatility. In introducing renminbi-oriented infrastructures, Brazil also wishes to give options to investors and traders, boost liquidity of the currency, and reduce transaction costs in trade with China, its largest export market.
What is happening?
Why is it happening?
What will happen next?
What do we expect
While more exporters will likely begin settling a portion of trade with China in renminbi, Brazil’s reliance on the dollar will endure in the medium-term. Building on its presidency of the Group of Twenty (G20) in 2024 and the COP30 climate change conference in 2025, Brasilia will prioritize international consensus-building and is unlikely to pursue major “anti-dollar” initiatives.
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
Russia
What is happening?
Why is it happening?
What will happen next?
The renminbi displaced the dollar as Russia’s most traded currency in 2023, while renminbi and gold have become Russia’s primary reserve assets. Russia and China have set up a currency swap instrument with a daily cap of 10 billion renminbi, and a cap of 20 billion renminbi on the first and last two trading days of each month. Four Chinese financial institutions with Russian operations are direct participants of CIPS.
What is happening?
Why is it happening?
Why it's happening
What will happen next?
Russia has pursued anti-dollar policies since 2014 to mitigate the impact of US financial sanctions. The share of dollar-denominated assets in the Central Bank of Russia’s reserves and the holdings of the National Welfare Fund noticeably diminished, in favor of the renminbi but also the yen, the British pound, and especially the euro. These efforts ultimately proved ineffective as Japan, the UK, and the EU all participated in the blocking on Russian sovereign assets instituted in the wake of the February 2022 invasion of Ukraine. Currently, using the renminbi for saving value and for transactions has become the most viable option for Russia to maintain connectivity to international financial markets and continue to trade with its partners.
What is happening?
Why is it happening?
What will happen next?
What do we expect
Russia is likely to become more reliant on the renminbi and Beijing to maintain access to the international financial system. Russia is likely to promote anti-dollar policies through the newly expanded BRICS and potentially encourage creating new cross-border payments infrastructure that avoids touching the dollar..
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
India
What is happening?
Why is it happening?
What will happen next?
India has avoided any initiatives that would help prop up renminbi in the global economy and has instead focused on expanding bilateral currency agreements that facilitate trade in rupees. These efforts have prioritized large trading partners such as the United Arab Emirates, Russia, and regional allies, as well as existing multilateral arrangements such as the Asian Clearing Union.
What is happening?
Why is it happening?
Why it's happening
What will happen next?
India’s primary concern is its domestic economy. India seeks to limit exposure to adverse US monetary policy and dollar movements that cause trade volatility, and to reduce transaction costs. Rupee payment mechanisms also allow India to continue trade with countries that are short on dollar reserves or unable to transact in dollars.
What is happening?
Why is it happening?
What will happen next?
What do we expect
India will remain hesitant to endorse any major “anti-dollar” efforts initiated by China, due to its strategic rivalry with Beijing, and by Russia, so as not to jeopardize its trade relations with the United States and Europe. India will continue to pursue bilateral currency agreements that promote trade settlement in local currencies, particularly with countries with which it holds a trade surplus. However, it will only adopt steps that add little risk to macroeconomic foundations and exchange rate stability. Rupee internationalization will thus likely be a slow-moving endeavor.
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
China
What is happening?
Why is it happening?
What will happen next?
China has established bilateral swap lines—an agreement between two central banks to exchange currencies—with all the BRICS members except for India, Ethiopia, and Iran and with more than forty central banks around the world. China’s Cross-Border Interbank Payment System (CIPS) settlement mechanism has grown rapidly and currently includes 142 direct and 1,461 indirect participants. CIPS is built in-part to rival SWIFT’s messaging system and dollar-based settlement mechanisms. In 2023, renminbi surpassed the dollar as China’s most used cross-border currency, although its share of global trade invoicing remains far behind the dollar. The share of renminbi in global foreign exchange reserves in the third quarter of 2024 dropped to 2.2 percent, from a peak of 2.8 percent in the first quarter of 2022.
What is happening?
Why is it happening?
Why it's happening
What will happen next?
China aims to internationalize the renminbi to increase its own global influence and mitigate the impact and potential risks associated with US and Western sanctions and other restrictive economic measures. China’s goal is not to replace the dollar with renminbi but instead lessen the dollar’s influence and move the global economy to a more multi-polar currency system.
What is happening?
Why is it happening?
What will happen next?
What do we expect
The renminbi’s share in global trade and reserves is likely to increase moderately, especially among China’s trading partners. However, Beijing’s policy of capital controls, something highly unlike to change in the near future, will be an important factor in enabling the renminbi to realize its potential as a global currency. In the meantime, China’s financial plumbing projects including CIPS and its wholesale CBDC projects will continue to advance and gain traction.
Size of swap lines with China
0
$50b
Number of direct members of CIPS
0
120
119
This number includes Chinese banks located in China as well as their branches abroad
China is the world's number one exporter of goods and the world's second largest economy. While China accounted for 16.52 percent of global goods trade in the first quarter of 2023, RMB accounts for only 3.47 percent of global payments in August 2023. A country with China's share of global GDP could have already seen its currency play a more global role if the right policy steps were taken. Beijing has stated that it prioritizes RMB internationalization since the early 2000s but has also not taken the needed steps to fulfill this ambition.
As a major exporter, China holds the power of demanding payments in yuan. However, in order to be able to deliver payments in yuan, China's trading partners need to have yuan reserves and a payment system in place. Both have been challenging for China's trading partners:
- Strict capital controls predispose trading partners to hold RMB reserves, and
- RMB settlement through clearing centers is a cumbersome process that requires foreign partners to go through only a handful of offshore RMB clearing centers
Aware of these challenges, Beijing has found the following solutions:
- It has used bilateral swap lines to boost the RMB reserves of its trading partners, and
- It has created a centralized settlement system called CIPS, which serves as a one-stop-shop for settling RMB transactions, without having to go through offshore RMB clearing centers
This project will monitor Cross-Border Interbank Payment System (CIPS) membership and observe how frequently China uses bilateral swap lines. Swap lines and CIPS membership could give us insight into China's financial ambitions:
- Does Beijing want to create a yuan-denominated alternative payment infrastructure and create a multi-polar currency system?
- Or does it intend to go as far as to challenge dollar dominance and the US-dominated global financial system?
Egypt
United Arab Emirates
South Africa
Iran
Russia
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Brazil
China’s Cross-Border Interbank Payments System (CIPS) is an alternative to the US based CHIPS system. It was created in 2015 to function as a settlement and clearance mechanism for yuan transactions. CIPS is supervised by the People’s Bank of China (PBOC) and requires direct participants to be within the PBOC’s jurisdiction. Participants can message each other through the CIPS messaging system, but 80 percent of transactions on CIPS rely on the SWIFT messaging infrastructure, which is Western-led.
While CIPS cannot itself internationalize the RMB, the growth in its network base could be a sign that China is succeeding in exporting its own financial infrastructure. Direct participation in CIPS is limited mainly to Chinese institutions, which means that the CIPS network is limited its reach.
However, if there is an increase in the list of local participants in CIPS for a given country, as well as the addition of new countries to the CIPS membership lists, this will be an important step in China’s currency and payments ambition. One challenge we encountered in this research is the lack of country-level information on indirect participants of CIPS. CIPS publishes a list of direct members, which is the basis for this analysis.
Swap lines are an agreement between two central banks to exchange currencies. They are designed to enable a country to obtain foreign currency in order to provide that money to their commercial banking system. Several major central banks, including the European Central Bank have swap lines with the US Federal Reserve, in order to exchange euros for dollars. If a country has a swap line with China, they can obtain RMB and then lend it to domestic banks, who can in turn facilitate yuan-denominated transactions on behalf of companies trading with China. If China continues to add bilateral swap line agreements with more countries, or increases the volumes in its existing swap lines, it is an indicator that China is accelerating plans to use RMB for settling bilateral trade and investment transactions and reduce reliance on the dollar.
BRICS is a grouping of major emerging markets founded by Brazil, Russia, India, China, and South Africa in 2009 and expanded to include Egypt, Ethiopia, Iran, and the United Arab Emirates in 2024. Saudi Arabia is considering joining. Its members have pursued policies to reduce their reliance on the dollar both at national and group levels. For example, China launched the gold-backed yuan oil futures contract to boost the use of yuan in oil trade, while Russia has de-dollarized its reserves and trade after being heavily sanctioned in 2022. At the group level, BRICS has primarily focused on settling bilateral trade in domestic currencies.
BRICS’ collective economic power now represents 37.3 percent of global GDP. BRICS includes some of the largest importers of oil (China, India) and the largest exporters of oil (Saudi Arabia, Russia, UAE). The group is also considering further expansion.
BRICS members’ interest in diversifying away from the dollar parallels Beijing’s determination to internationalize the RMB.
This project will examine whether BRICS manages to develop a common currency or an alternative payment system, and will also analyze the group's adoption of RMB and China’s settlement system. This analysis focuses on China as it represents the only realistic dollar alternative within the BRICS at present.
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Why is it happening? Russian companies experienced significant financial sanctions in 2014, which became a motivation for Moscow’s anti-dollar policies and subsequent dedollarization in 2022. While Russia has adopted anti-dollar policies since 2014, full dedollarization and subsequent “yuanization” became inevitable in 2022, when Russia’s sovereign assets were blocked by the G7 jurisdictions and the reserves which Russia had moved out of dollars and into euros, British pounds and yen became inaccessible.
What is happening? Since Russia’s invasion of Crimea in 2014 and subsequent sanctions, Moscow has made significant progress both in accumulating renminbi reserves through bilateral swap lines and connecting its banks with China's CIPS.
In October 2014, Russia and China’s central banks signed the first three-year bilateral swap agreement, which gave the Central Bank of Russia (CBR) 150 billion renminbi in exchange for 815 billion rubles and renewed it twice in 2017 and 2020. After the 2022 full-scale invasion of Ukraine, the subsequent blocking of CBR’s assets, and the sanctioning of major Russian banks, the availability of renminbi for the Russian financial market became critical. The two central banks set up a daily swap instrument capped at ten billion renminbi.
In March 2024, the CBR doubled the daily cap on renminbi-ruble swap transactions to twenty billion renminbi ($2.8 billion) on the first and last two trading days of each month. Swap lines will continue playing a significant role in building Russia’s reserves and in injecting renminbi liquidity in the financial system, and this will likely result in the further expansion of swap line volumes with China.
Meanwhile, Russia has made steady progress in linking Russian banks to the Chinese CIPS. Twenty-three Russian banks are indirect participants of CIPS while four Chinese banks based in Russia are direct participants. Chinese direct participants of CIPS settle transactions on behalf of Russian indirect participants. Russian banks will continue applying for CIPS membership as the share of renminbi in Russia’s cross-border transactions grows.
Russia has also created its own financial messaging platform—Financial Messaging System of the Bank of Russia (SPFS)—which serves as a Russian analogue to SWIFT. By February 2020, there were more than four hundred Russian banks connected to SPFS and only twenty-three foreign banks. Notably, the Chinese government has not encouraged Chinese banks to join SPFS.
What will happen next? The main factor impacting Russia’s rate of renminbi adoption for trade and reserves is the West’s resolve in sanctions imposition and enforcement. The G7 Summit in June 2024 was yet more proof that the West will not relax sanctions on Russia as long as the war continues. In fact, the US Treasury Department significantly expanded the scope of secondary sanctions: Now any foreign financial institution dealing with “Russia’s war economy” could be sanctioned, not just those transacting with Russia’s military industrial complex. The new administration is unlikely to dislodge these sanctions in the immediate-term.
Immediately after the Treasury’s announcement, Moscow Exchange suspended trading in dollars and euros, meaning that Russian companies and banks will no longer have the benefits of oversight and liquidity that the central exchange used to provide.
This sharp escalation of sanctions means that renminbi is now Russia’s only option for cross-border transactions and reserves. The CBR recently published a report explaining that Russia is struggling to find other alternative reserve currencies because all other currencies issued by “Russia-friendly countries” are highly volatile, less liquid, and often subject to capital controls.
What will happen next? While Egypt’s financing gaps have reduced following the increase in the IMF’s bailout loan to eight billion dollars, uncertainty around its medium-to-long-term access to global capital markets persist. Cairo will hence continue looking for alternative sources of debt. Bonds issued in renminbi and yen, as well as other innovative instruments tapping new markets such as sukuk (sharia-compliant bonds) will play a growing role in the country’s financing.
Egypt will continue denominating exports in dollars to replenish its dollar reserves and be open to use domestic currencies for imports. But it will likely have to accept settling in the partner country’s currency given the instability and lack of trust in the Egyptian pound.
Nevertheless, the Egyptian economy is being closely monitored by the IMF, on which the country is relying for short-term balance-of-payment issues. Any large structural changes that could complicate negotiations are thus unlikely.
Why is it happening? South Africa invoices most of its trade in dollars, which makes its economy highly dependent on dollar exchange rate fluctuations. To hedge against currency risk and diversify its trade and currency composition, South Africa has been facilitating trade with China in their national currencies, its largest trading partner for both exports and imports. China primarily imports gold, diamonds, and iron ore from South Africa, meaning that it is well within the interests of the PRC to increasingly pursue making these payments in renminbi.
What will happen next? South Africa will continue to support initiatives that promote the use of national currencies in international trade among BRICS countries. As the host of the G20 in 2025, South Africa is expected to steer away from any “anti-dollar” narratives, concentrating instead on improving existing payment systems, which are currently slow and expensive for African nations.
What will happen next? Given the relatively small size and depth of the Emirati capital market, the main attraction of the dirham remains its free convertibility to the dollar at a fixed exchange rate. While transacting in dirhams may reduce transaction costs, it still implicitly relies on the dollar, and the UAE must maintain large amounts of dollar reserves to maintain the peg and the stability of its economy.
The UAE itself is seeking to increase US involvement in the region, calling in November 2022 for Washington to formalize its security commitments. Countries that rely on the United States for security are unlikely to support anti-dollar policies, and the UAE is thus unlikely to pursue any dramatic policy shifts beyond bilateral currency deals.
Why is it happening? Iran has increased its use of non-dollar currencies to ensure access to foreign exchange reserves and essential imports amid extensive economic and financial sanctions.
Following its withdrawal from the Joint Comprehensive Plan of Action on Iran’s nuclear program in 2018, the United States reimposed sanctions on Iran, including banning oil exports, disconnecting the CBI and Iranian financial institutions from SWIFT, and blocking Iranian foreign exchange reserves held in foreign accounts.
It is likely that Iran has increased its renminbi share of “accessible” reserves and has used renminbi to purchase machinery and electronics from China. However, the absence of reserves and financial transaction data make this theory difficult to confirm.
More broadly, Iran has encouraged non-dollar trade settlement to counteract the effects of a falling and volatile rial-dollar exchange rate, which makes dollar-denominated imports more expensive for Iranian companies. Iranian authorities have periodically refused to process dollar-denominated orders and have required financial reports to be submitted in euros rather than dollars.
Why is it happening? The UAE is primarily driven by its goal of doubling its GDP to $800 billion by 2030. Transacting in domestic currencies with large emerging markets grants it a competitive advantage in accessing those markets as transaction costs are reduced. Unlike Saudi Arabia, the UAE is more comfortable simultaneously dealing with multiple currencies. Collaborating with large economies on financial innovation, an area where the UAE has built expertise over decades, allows the country to punch above its weight in the global economy.
Moreover, friction has emerged in the UAE’s energy and economic ties with the United States. The United States has warned the UAE against supporting any measures to evade sanctions on Russia or else risk losing market access to the G7. Abu Dhabi is also displeased with the potential passage of the No Oil Producing and Exporting Cartels Act in the US Congress, which the UAE believes would upend energy markets.
Why is it happening? Egypt is looking for less conventional sources of international debt and import financing, as it is facing a severe dollar shortage. While dollar shortages have persisted for more than a decade, the coronavirus pandemic along with wars in Europe and the Middle East have further diminished earnings from the country’s largest sources of foreign currency—tourism, energy, and the Suez Canal. In recent years Egypt has struggled to access global capital markets.
Approaching non-traditional markets for debt sourcing will help prolong debt maturity, access external debt at lower interest rates, diversify both financing resources and currencies, and attract a new class of investors. It will also allow the country to alleviate pressures on dollar reserves.
What will happen next? Iran will continue to use the renminbi for bilateral settlement with China, but it will likely expand trade settlement and financial infrastructure in other non-dollar currencies such as the lira, rupee, and ruble.
In 2023, China accounted for over 90 percent of Iranian oil exports, which accounted for 40 percent of the Iranian state budget. However, as the renminbi is not fully convertible, Iran is unlikely to expand use of the currency with other trading partners. Aside from the US-sanctioned Bank of Kunlun, the PBOC and major Chinese state-owned banks are unlikely to risk US financial sanctions by processing Iranian oil payments or by opening renminbi-clearing facilities in Iran.
Instead, Iran will likely expand its trade settlement and financial infrastructure with other non-dollar currencies. Since 2017, the CBI has maintained a $1.4 billion swap line with the Central Bank of Turkey, and in December 2023, the Russian Sberbank opened a $70 million line of credit with the Iranian Bank Melli. Iran will likely continue to advocate for non-dollar settlement in regional blocs such as the Shanghai Cooperation Organization and BRICS.
What is happening? In 2015, South Africa and China signed a three-year bilateral swap agreement, where the South African Reserve Bank would get 30 billion renminbi for 54 billion rand. In 2018, the two central banks renewed this swap line for another three years, and renewed it again in 2021.
In 2016, People’s Bank of China authorized its Johannesburg Branch to serve as the renminbi clearing bank in South Africa. Currently, Johannesburg branches of PBC, China Construction Bank Corporation, and the Bank of Communications are direct participants of CIPS, and are able to settle renminbi-denominated transactions.
Around the same time as swap lines and CIPS was introduced in South Africa, the country experienced a major growth in the usage of renminbi for payments in 2014-2016: 65 percent increase in the two year period.
In recent years, exchange rates of rand and renminbi against the dollar have moved in correlation with each other. In 2023, this correlation has particularly strengthened, which can be explained by South Africa’s trade-interconnectedness with China.
Despite the growth in the use of renminbi, the dollar is still a dominant currency in South Africa’s trade. As of 2017, 52 percent of exports were invoiced using US dollars, a disproportionately high amount considering that only 5 percent of exports were headed to the United States. Seventeen percent of exports were invoiced in euros, and 25 percent in South African rand.
What is happening? The central banks of Egypt and China first signed a currency swap agreement in 2016 for eighteen billion renminbi, which has since been renewed twice in 2020 and 2023. Egypt holds a large trade deficit with China, and the swap line functions as a backstop in case the country is unable to pay for the imports in the preferred currency. The Central Bank of Egypt also secured a seven billion renminbi ($957 million) loan from the state-run China Development Bank in 2023 to finance Belt and Road Initiative-oriented projects. Similarly, to alleviate the pressure on Egypt’s foreign currency reserves, Chinese company Famsun Group accepted payment in Egyptian pounds instead of dollars for the construction of food manufacturing infrastructure.
Given that Egypt is heavily reliant on Russian wheat imports and tourists, a senior Egyptian minister expressed an intent to establish payment mechanisms using domestic currencies with Russia following the 2022 sanctions, including connecting with Russia’s MIR system. In January 2023, the Central Bank of Russia added the Egyptian pound in its list of daily exchange rates with the aim of reducing information barriers to price discovery.
In October 2023, Egypt issued renminbi-denominated “panda bonds” worth 3.5 billion renminbi ($479 million) at rates lower than dollar-denominated bonds, becoming the first African country to do so. Egypt also issued two yen-denominated “samurai bonds” in March 2022 and November 2023, with a third issuance already approved, each for the equivalent of $500 million.
What is happening? The UAE first established renminbi-clearing mechanisms in 2015. By 2023, four Emirati banks were direct members of CIPS and the Emirati central bank had opened a swap line with the PBOC. In March 2023, China completed its first liquified natural gas import deal from the UAE paid for in renminbi. This transaction was carried out via the Shanghai Petroleum and Natural Gas Exchange.
In 2023, India and the UAE agreed to a local currency settlement system. Subsequently, the governments linked their instant payment platforms as well as domestic credit and debit card systems. The Reserve Bank of India subsequently nudged firms to use local currencies in bilateral trade, and by August firms had completed the trade of a million barrels of oil in domestic currencies. Gold and jewelry traders have taken up local currencies to lower currency-associated transaction costs.
China and India have been particularly responsive to the UAE’s pursuit of bilateral currency arrangements because they source large amounts of energy from the UAE, the UAE has a well-developed financial center, and, most importantly, dirhams can be freely converted to the dollar at a fixed exchange rate.
The UAE is a full and founding member of the mBridge Project, which also includes China and whose membership will continue expanding. The mBridge participant central banks reportedly piloted renminbi payments using mBridge for oil and gas in 2022. The UAE is also exploring interoperability of its CBDC with India.
What is happening? Over the past decade, Iran has settled oil exports in non-dollar currencies such as the lira, renminbi, rupee, and ruble and has developed new cross-border financial infrastructure. In 2023, the Central Bank of Russia and the Central Bank of Iran (CBI) signed an agreement to connect fifty-two Iranian banks that use an Iranian alternative to SWIFT—the System for Electronic Payments Messaging (SEPAM)—to over four hundred Russian banks which use the Financial Messaging System of the Bank of Russia (SPFS). In May, Iran and Russia confirmed that they were working to settle transactions using central bank digital currency (CBDC).
Chinese and Iranian officials have periodically discussed increasing the use of the renminbi for cross border settlements. However, the CBI and the People’s Bank of China (PBOC) have not signed a currency swap line, and there are currently no Iranian banks that are direct or indirect members of CIPS. The PBOC is unwilling to develop these mechanisms, as the United States may impose sanctions on foreign financial institutions, including foreign central banks, that conduct transactions with the CBI and the Iranian financial system.
At a regional level, the Asian Clearing Union, which settles multilateral transactions between Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, Sri Lanka, Myanmar, and Iran, replaced its SWIFT-based system with SEPAM. In May, Iran announced the development of an “offshore rial” which would be used for trade settlement with Russia, Afghanistan, and Iraq.
What is happening? China and Brazil signed a three-year currency swap agreement in 2013, but the details of the utilization and renewal of the 2013 swap line with the PBOC are unavailable. Nevertheless, the renminbi, which was not part of Brazil’s foreign reserves until 2018, had by 2022 become the second-highest currency in Brazil’s reserves at 5 percent, ahead of the euro. The dollar remains dominant at 80 percent. The Banco Central do Brasil (BCB) is prioritizing diversification of reserves and maintaining exposure to currencies that fare better in adverse market conditions.
Brazil relies heavily on the Chinese market for its exports, selling nearly a quarter of all exports, including most of its beef and soybeans, to the country. While Brazil is among the few countries that holds a trade surplus with China, Beijing has increased the scale of agricultural infrastructure investments in Brazil in the last decade.
In March 2023, Brazilian bank Banco BBM, controlled by a Chinese state bank, became the first in Latin America to sign up for CIPS, the renminbi settlement mechanism. There have been no public statements hinting at more banks joining CIPS, but several large Chinese banks whose Chinese branches are part of CIPS are also operating in Brazil and could join in the coming years.
In April 2023, the Brazilian branch of The Industrial and Commercial Bank of China processed the first cross-border settlement in renminbi following an agreement between the Brazilian and Chinese central banks to establish a renminbi clearing house in Brazil. Renminbi-based transactions will likely become more prominent in the short and medium term.
Brazil is set to assume the BRICS Presidency in 2025, with “dedollarization” to be a key area of focus. The Brazilian presidency will likely focus on the greater role of the Global South in global governance.
Why is it happening? The BCB suggests that a greater involvement of the renminbi in Brazil's international financial dealings will boost its liquidity in Brazil, maintain foreign exchange reserves in hard currency in the country, diminish the need for intermediaries in international payments, and align Brazil's payment systems more closely with those of China.
Encouraging a multipolar world across domains remains a feature of President Luiz Inácio Lula da Silva’s foreign policy. Under Lula and Finance Minister Fernando Haddad, support for Latin American trade in local currencies has grown, with leaders advocating for shared currencies regionally to reduce transaction costs and ensure liquidity, though details remain unspecified.
What will happen next? In August 2023, Eldorado Brasil, a paper pulp company, executed the first closed-loop transaction with China entirely in local currencies. Such transactions could become more common as Suzano, the world’s largest pulp producer, and Petrobras, among the world’s largest oil companies, among others consider settling trade with China in renminbi.
The BCB’s public opposition to joint currencies may dwindle as the new governor, whose term begins at the end of 2024, is expected to align with Lula.
As the president of the G20 (2024) and COP30 (2025), Brasilia is unlikely to actively pursue any measures that may be considered “anti-dollar.” Brazil’s agenda focuses on social and environmental justice, which requires broad-based support, leaving little political capital to pursue de-dollarization initiatives.
Swap Lines: $2.8b
This is a cap on daily exchanges of rubles and renminbi between Russian and Chinese central banks on the first and last two trading days of each month. Every other day of the month, the swap limit is $1.48 billion.
Swap Lines: $30b
Brazil and China signed a swap line in 2013 for a period of three years.
Four direct participants
Participating institutions:
1. Industrial and Commercial Bank of China RMB Settlement Center in Russia (Moscow)
2. Bank of China (Moscow, Vladivostok, Khabarovsk)
3. China Construction Bank Limited (Moscow)
4. Agricultural Bank of China (Moscow)
One direct participant
Bank Of Communications BBM S.A.
Bank Of China (Brasil) S.A.
Master Bank S.A.
China
1 / 3
2 / 3
3 / 3
India
1 / 3
2 / 3
3 / 3
Indonesia
1 / 3
2 / 3
3 / 3
What is happening? Beijing has openly stated its objective to internationalize the renminbi and increase its share in global transactions and central bank reserves.
The People’s Bank of China (PBOC) has established bilateral swap lines with all current BRICS members except for India, Iran, and Ethiopia, and with more than forty central banks around the world. Bilateral swap lines provide renminbi liquidity to China’s trading partners’ financial system, and allow them to use renminbi in trade.
In addition to establishing swap lines, Beijing has also created a messaging and settlement mechanism for the renminbi—CIPS. Since its creation in 2015, CIPS has grown rapidly and as of January 2025, includes 168 direct and 1,461 indirect participants. While CIPS processes a fraction of the volume of transactional messages seen by SWIFT, CIPS is rapidly increasing. Over the past five years CIPS volumes have grown, on average, 40 percent year-on-year.
Outside of CIPS, China is actively developing its Central Bank Digital Currency (CBDC), the e-CNY, as a significant domestic payment alternative. China’s wholesale CBDC project aims to streamline interbank transactions and enhance cross-border financial efficiency. Project mBridge is a joint experiment with PBOC, Hong Kong Monetary Authority, the Bank of Thailand, the Central Bank of the UAE, and Saudi Arabia, to create common infrastructure that enables real-time cross-border transactions using CBDCs. In October 2022, the project successfully conducted 164 transactions in collaboration with twenty banks across the four countries, settling a total of $22 million, with almost half of all transactions in the e-CNY. In 2024, the Bank for International Settlements withdrew from the project after it reached the minimum viable product stage, amid rumors that it was being used as a model for the BRICS Bridge and other sanction evasion efforts.
Notably, in 2023, renminbi surpassed the dollar as China’s most used cross-border currency. Renminbi’s share in cross-border transactions rose to 48 percent from nearly zero in 2010, while the dollar's share dropped from 83 percent to 47 percent over the same period. Meanwhile, in the global trade finance market, renminbi’s share remains below 5 percent, far behind the dollar's share of 84 percent.
Meanwhile, the share of renminbi in the global foreign currency reserves in the fourth quarter of 2023 dropped to 2.3 percent, from a peak of 2.8 percent in the first quarter of 2022. This coincides with Russia’s invasion of Ukraine in February 2022. China’s alignment with Russia might have caused concerns among reserve managers who have decided to reduce renminbi holdings due to geopolitical considerations.
Why is it happening? China is motivated to internationalize the renminbi to increase its standing and influence in the global financial system while mitigating against risks in the event of increased tensions with the West.
Currently, China has significant exposure to the US dollar, including through trade invoicing, reserve holdings, and financing activities. Dependence on the dollar reduced Beijing’s policy autonomy during the 2008 financial crisis, when China’s ability to obtain financing relied solely on the Fed’s emergency liquidity provision.
Russia’s invasion of Ukraine and the subsequent escalation in the use of financial sanctions has raised questions whether sanctions would be imposed against China in case of a conflict escalation in the Taiwan strait. While this scenario is hypothetical, Beijing has taken notice. A financial infrastructure and payment system that is not reliant on the dollar or euro would allow Beijing to mitigate against the potential risks associated with Western sanctions.
Ethiopia
2 / 3
1 / 3
3 / 3
What will happen next? Whether China’s ambition of further internationalizing the renminbi becomes a reality depends on Beijing’s willingness to take steps towards relaxing capital controls, which would imply allowing companies and individuals to move money freely in and out of the country. In the meantime, swap lines allow the PBOC to expand usage of the renminbi without relaxing capital controls. China will lead Project mBridge and will likely expand the network of participants. CIPS will continue to gain traction as a plausible alternative to the Western dominated financial system.
Why is it happening? Projected to become the world’s third largest economy by 2030, New Delhi believes rupee internationalization is the natural next step in cementing its economic and diplomatic weight.
New Delhi considers the political risk of sanctions imposition to be low. India seeks to reduce exchange-rate risk and to diminish its vulnerability to US monetary policy tightening and dollar strength which inadvertently lead to financial tightening within India. Furthermore, increased rupee-trade will reduce the pressures on its forex reserves.
As the finance minister of India told the Atlantic Council in October 2023, external financial needs have accelerated the provision of rupee-settlement options. India’s efforts have been driven by the imposition of sanctions in 2015 on Venezuela and in 2018 on Iran, large energy sources for India, along with the 2022 sanctions on Russia as well as post-COVID debt crises and dwindling foreign exchange reserves among regional partners such as Bangladesh and Sri Lanka.
What is happening? India has refrained from collaborating with China on anti-dollar efforts due to New Delhi’s broader geostrategic rivalry with Beijing. No Indian bank is connected to CIPS, and New Delhi has also discouraged domestic firms from settling trade in renminbi.
India has sought to internationalize the rupee on a limited scale instead through bilateral agreements. In July 2022, the Reserve Bank of India (RBI) established a rupee payment mechanism that authorized the creation of vostro accounts, accounts held by correspondent banks on behalf of other banks. Such vostro accounts have been used by Iran in 2018 and Russia in 2022 following the imposition of sanctions. New Delhi has sought to assuage concerns about repatriation by facilitating investments in stocks, government securities, and infrastructure.
India is exploring a central bank digital currency (CBDC) interoperability framework with the United Arab Emirates (UAE) and is in discussions with eighteen countries on cross-border payments using the digital rupee. It is also internationalizing its Unified Payments Interface (UPI), with advanced negotiations with Russia to integrate India’s UPI and Rupay with Russia’s System for Transfer of Financial Messages (SPFS) and Mir, allowing for cross-border payments.
The RBI has scaled up its purchases of gold in international markets, amassing over two hundred tons since 2019. It physically shifted a hundred tons of gold from England to India in May 2024 and plans to shift more in the near term citing high storage costs.
Former Reserve Bank of India Governor Shaktikanta Das emphasized that India is not pursuing a policy of dedollarization and that there have been no decisions regarding a BRICS currency.
What will happen next? RBI has told banks to prepare for a multipolar currency world and that India will remain focused on promoting rupee-invoicing and settlement for commodities.
New Delhi will pursue bilateral agreements like the one with the UAE which has enabled the trade of some oil, gold, and jewelry in local currencies. New Delhi will reportedly focus on countries with which it shares a trade surplus or a small deficit, with Brazil, South Africa, and Saudi Arabia the next targets. Providing avenues to invest surplus rupees, reducing transaction costs, and reducing the country’s current account deficit will remain priorities in reaching new agreements.
India’s experiments on a cross-border wholesale CBDC, including projects with the UAE, will likely accelerate in the year ahead—enabling international rupee transactions that bypass the dollar.
Why is it happening? Indonesia is heavily dependent on imports of raw materials and export revenues from commodities, most of which are traded and denominated in dollars. This makes Indonesia particularly vulnerable to global financial markets and dollar fluctuations. In response, Indonesia is pivoting away from the dollar in hopes of stabilizing its trade and currency environment.
When the dollar strengthens, Indonesia’s debt repayments and import costs can surge, creating a scenario where the country has to spend more rupiah to meet its dollar-denominated commitments, and weakening the rupiah. Additionally, Indonesia is part of broader ASEAN initiatives that promote regional payment connectivity to strengthen financial resilience and increase intra-regional trade.
What will happen next? Indonesia will continue to establish bilateral local currency trading arrangements with regional partners while also participating in broader ASEAN initiatives to enhance regional payment connectivity and reduce dollar dependency. In 2023, Indonesia launched a task force focused on de-dollarization, aiming to boost the use of regional currencies in trade.
The initiative involves improving cross-border payment systems and signing Memorandums of Understanding (MoUs) with countries such as India and South Korea to facilitate more trade settlements in local currencies. Although progress has been limited so far, Indonesia's recent inclusion in BRICS could enable it to capitalize on the group’s efforts to develop new trade channels outside the dollar.
What is happening? More than 80 percent of Indonesia's import trade and 90 percent of its export trade are conducted in US dollars. As significant trading partners, Indonesia and China have established multiple frameworks to facilitate the use of the rupiah and renminbi in bilateral trade and transactions.
Indonesia has also implemented local currency transactions with many countries including Thailand, Malaysia, China, and Japan. In January 2025, Indonesia became the latest member to join the BRICS bloc, and says it is moving in the same direction as BRICS on diversification away from the dollar.
Within the past decade, Indonesia has established 5 local currency settling agreements with Japan, Malaysia, China, Thailand, South Korea, and India. In the energy sector, Indonesia has taken steps to encourage the use of the rupiah in transactions related to natural resources. In 2015, the government mandated that all transactions related to the export and import of oil and gas must be conducted in rupiah.
In September 2023, Indonesia launched a national “de-dollarization” task force to facilitate cross-border trade in local currencies and reduce the US dollar dependence, specifically in regional south east asia trade.
Why is it happening? One reason why Chinese and Ethiopian central banks have not agreed on swapping national currencies is because it would not be beneficial for Ethiopia. Ethiopia does not have the type of economic relationship with China that other BRICS members do.
Additionally, China might be worried about Ethiopia’s ability to pay back the borrowed renminbi. Swap lines are a show of trust between two central banks, and Ethiopia's recent sovereign default might impact Ethiopia’s status as a desirable country to establish swap lines with.
China’s relatively low volume of trade and transactions with Ethiopia could also explain why CIPS has not expanded to Ethiopia (at least for now).
What will happen next? Ethiopia does not have the energy or natural resources to export to China at a large scale, and without this element, it’s not worth it for Ethiopia to adopt the renminbi for trade or reserves. Additionally, given the strain costly Chinese loans have put on Ethiopia’s financial system, Ethiopia might not be all too eager to strengthen financial cooperation with China, and instead might forge closer ties with other BRICS members. For example, in November 2023, India reportedly asked Ethiopia to explore the possibility of trading in national currencies. Thus, in the foreseeable future, Ethiopia is likely to balance against China and its currency.
What is happening? Ethiopia does not have a bilateral currency swap agreement with China, nor does it have a bank directly participating in CIPS.
Among the BRICS members, Ethiopia has the lowest gross domestic product (GDP), standing at less than half the size of Iran, the second-smallest economy. Unlike most other BRICS members, it does not export energy or natural resources to China.
Meanwhile, Ethiopia exported $435.95 million worth of predominantly agricultural products to China in 2023 and imported $2.59 billion worth of mostly machinery, nuclear reactors, and electronic equipment.
There are no reports indicating Ethiopia’s widespread adoption of the renminbi for trade or reserves, which aligns with the fact that there are no swap lines or CIPS direct member banks in Ethiopia.
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