By establishing a new reserve currency, Russia and China are preparing a challenge to the dollar's hegemony.

A competing reserve currency to the SDR of the IMF is being developed by Russia and the other "BRICS" nations.

Along with China and the other BRICS countries, Russia is prepared to create a new global reserve currency that may potentially threaten the supremacy of the US dollar.

The new reserve currency, which would be based on a basket of the currencies of the group's members Brazil, Russia, India, China, and South Africa, was hinted at by President Vladimir Putin.

Putin stated at the BRICS Business Forum on Wednesday that "the issue of developing the international reserve currency based on the basket of currencies of our nations is under discussion."

"We are prepared to work honestly with any ethical partners." Despite the fact that the dollar has long been regarded as the world's reserve currency, its supremacy in terms of the proportion of global currency reserves is dwindling.

According to the International Monetary Fund, central banks are attempting to diversify their holdings by including both conventional assets like the Swedish krona and the South Korean won as well as non-traditional ones like the yuan.

The IMF's perceived US predominance is being addressed, according to ING's global head of markets Chris Turner, who stated as much in a note.

It will enable the BRICS to create their own economic system and currency inside that system.

Following Western sanctions imposed as a result of the conflict in Ukraine, Russia made this step in an effort to re-enter the international financial system after sanctions effectively cut off its access to dollars and placed pressure on its economy.