De-Dollarization: Is the World Ready for a Multi-Currency Financial System?

📅December 31, 2025 at 1:00 AM

📚What You Will Learn

What de-dollarization means and its drivers.
Current trends in reserves, trade, and payments.
Key players pushing alternatives like RMB and gold.
Implications for global economy and US influence.
Future outlook for a multi-currency world.

📝Summary

De-dollarization is gaining momentum as nations diversify away from the US dollar in trade, reserves, and payments, driven by geopolitical tensions and sanctions fears. While the dollar still dominates at around 58% of global reserves, trends like rising gold holdings and local currency use signal a shift toward a multipolar system. The world may not be fully ready, but gradual change is underway.

ℹ️Quick Facts

Dollar's share in global reserves fell to 56.3% in mid-2025, lowest in 30 years.
Foreign ownership of US Treasuries dropped to 30% in early 2025 from over 50% post-GFC.
China's SWIFT payments share rose to 3.5% by April 2025.
US dollar dropped 11% in first half of 2025.

💡Key Takeaways

De-dollarization is real but slow; dollar remains dominant at ~58% of reserves.
Emerging markets like China, Russia lead gold buying and local currency trade.
Geopolitical risks and sanctions accelerate diversification efforts.
A multipolar system could boost non-US economies but hurt US assets.

De-dollarization means reducing reliance on the US dollar for global trade, finance, and reserves. It's driven by fears of US sanctions and geopolitical tensions, with countries like China and Russia leading the charge.

This shift could reshape power balances, depreciating US assets while boosting others. Emerging markets benefit by trading commodities in local currencies, cutting dollar needs.

Global reserves show dollar at 58%, down from peaks, with gold rising sharply. EM central banks bought heavily, dropping Treasury demand—foreign ownership now 30%.

Dollar weakened 11% in H1 2025, losing safe-haven status amid global opportunities. China's RMB use grew, with 3.5% SWIFT share and bilateral trades.

EM dollar deposits hit $830B, but China's fell since 2017 amid trade wars.

Sanctions fears push de-dollarization; Russia uses China's CIPS, BRICS explore locals. ASEAN's May 2025 pact advances regional currencies.

China internationalizes RMB via investments and payments. India, Brazil trade oil in rupees, yuan, saving on dollars.

Policy risks like US debt spur diversification; CBDCs offer future alternatives.

US faces higher import costs, weaker assets; exporters gain from cheap dollar. Non-US investors hedge more, pressuring dollar.

A multi-currency system fragments payments, aiding EM growth but risking instability. Gold hedges fiat risks.

Dollar's edge persists via US economy strength, but multipolar reserves loom.

Trends are bounded and slow; no sudden end to dominance. Diversification responds to risks, not full replacement.

Challenges like RMB's limits persist, but gold and locals gain. Advisors note real shifts—plan for multipolar finance.

Gradual change favors preparedness over panic.

⚠️Things to Note

Gold's reserve share is rising as a hedge against fiat currencies, led by China, Russia, Türkiye.
China's dollarization in deposits has fallen since 2017 amid US tensions.
ASEAN agreed in May 2025 to local currency settlements.
Dollar weakness in 2025 tied to global investment shifts and hedging.

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