Brazilian president Lula da Silva is urging BRICS to introduce a reserve currency as a counterweight to the dollar.

Speaking at the 15th annual BRICS summit in Johannesburg, South Africa, on Aug. 23, Lula said that forcing the dollar for trade settlement was unfair.

Lula believes that BRICS should create its own reserve currency to trade with each other. “[A BRICS currency] increases our payment options and reduces our vulnerabilities," he said at the summit.

Breaking the dollar system is akin to rewiring the global financial system. The question is: Can BRICS pull it off?

Dethroning the dollar is easier said than done

BRICS has been a forum for lots of experimental talks about how to overcome the dollar.

Commodity-backed currency. CBDC. Chinese yuan. The list goes on. But each proposal runs into its own set of problems.

One of the biggest is integration.

Each BRICS member has its own national interests. Some countries, like India, are friendlier toward the U.S. Others, like China, haven’t been able to convince trading partners to settle in the yuan.

As Mihaela Papa, assistant professor at Tufts University, pointed out, agreeing on a common currency would be difficult given the vast economic and political differences among BRICS countries.

Exchange rates, payment systems, liquidity, regulations—it would be like creating an entirely new financial plumbing system. It could take years, if not decades, to pull off.

That said, there seems to be political will on the part of BRICS to at least try going down this route.

The organization is brimming with confidence after 22 new countries formally requested membership. Over 40 countries in total have expressed interest in joining the bloc.

That’s an impressive feat considering that BRICS was merely a term coined by investors over 20 years ago to call attention to the next wave of emerging economies.

But along the way, BRICS developed an organizational structure with annual summits and common development goals.

Today, it’s considered the biggest geopolitical rival of the G7—a trade bloc of seven Western countries headed by the United States.

Dollar’s reign continues for now

The dollar remains the king of currencies, but it no longer has the clout it once had.

Today, the dollar accounts for 58% of global currency reserves. That’s down from around 70% in 2000.

If it ever happens, the end of the dollar’s hegemony will likely be a “slow erosion” instead of a single event.

The dollar losing its reserve-currency status would be bad for Americans, no matter how it happens.

The currency would lose value, leading to higher import prices and a permanent decline in living standards.

America would no longer be able to run large deficits because demand for its bonds would decline. That means a decline in government spending.

For investors, it could also lead to lower stock market values as capital flowed out of Wall Street.

A BRICS common currency may be a pipedream for now, but the emergence of dollar rivals is something Washington should take very seriously.