How the UAE Has Become the Financial Spine of BRICS

BRICS’ Bid to Rewire Global Trade

• BRICS has wanted to create a decentralised currency since the Moscow financial forum 2025. The BRICS nations have decided on the rough outline of what this system is going to look like. The BRICS nations are the trading powerhouses of the Global South in trade domains such as energy, manufacturing and most importantly for the purposes of this Cordoba note, critical minerals and rare earth metals. The obvious benefit is bypassing legacy institutions that have previously dominated international trade and financial flows. However, what is less obvious is which BRICS nation benefits the most.

The Politics for the UAE

• In the Western led financial system, energy exporters require currency diversification to hedge against potential sanctions and the unprecedented dollar volatility. The BRICS currency initiative seeks to facilitate non-dollar trade settlement across Asia, Africa, and Latin America. The UAE already trades with China and India, settling part of the payments in the renminbi and the rupee. With the UAE annual forex trading volume at half a trillion dollars, it has a currency market that with numerous currencies flowing through its laxly regulated financial institutions meaning that it has the potential to be converted into a regional FOREX centre for BRICS without stringent controls. This would provide the UAE with more stable cash flows and geopolitical insulation from the dollar. This in turn, should lead to more capital inflow, ultimately helping the UAE achieve its goal of diversification.

• The UAE maintains strong strategic relations with both the United States and China. It hosts US troops and manages dollar – denominated assets through US markets via their sovereign wealth fund. At the same time, they have shown a willingness to ally with China through investment partnerships, which was seen during the Chinese led construction of the UAE’s 5g network and the investments received for its ports. Thus, they are operating within both systems without being forced to choose, implying that they could be used as the link between east and west. If the U.S. pressures countries to avoid BRICS systems after geopolitical tensions, then the UAE can present itself as a neutral intermediary that benefits both sides.

The Economic for the UAE

• The decentralised or commodity-backed currency that BRICS wants to create requires physical assets such as gold and rare earth metals. In this regard, the UAE is also positioned well as it dominates regional gold refining and re-export by sourcing and profiting of unrecorded African gold from Sudan valued at $6.331 billion. Therefore, the UAE can also provide the physical reserve base that could underwrite a BRICS trade token, making the UAE of salient importance to its convertibility.

• The UAE boasts a stable GDP growth rate at 4%, an average inflation of around 2% and a high sovereign credit rating, with S&P Global rating it at ‘AA’. Stable institutions and lower and a predictable jurisdiction also make the UAE one of the more investable environments which will help it operate as the potential hub of the new BRICS currency. 

Cordoba’s View

• The US dollar is still the dominant currency reserve due to its widespread embeddedness within the global financial systems. Each trade that is settled outside of this system is an incremental hit on the global demand for the dollar weakening their leverage and strengthening alternative financial institutions. Regional currencies such as the renminbi and the rupee are gaining greater depth as they become operational currencies for BRICS trade. A commodity-linked unit could become an intermediary rather than an outright replacement for the dollar, which would be useful for many countries that face dollar shortages. Over time this could mean that the dollar, whilst weakened, will still dominate finance and reserves albeit to a lower extent, whilst the BRICS currencies dominate physical trade.

• This two – part system, where de dollarisation and the implementation of a commodity backed currency is likely to occur, is one in which the UAE stands to gain the most. It has the political, economic and financial factors to become a backbone to the future of international payments. If the BRICS currency is created via a decentralised, commodity-linked settlement system, and If that system requires neutrality, gold liquidity, and institutional stability then the UAE amply satisfies these conditions.