The global dominance of the U.S. dollar is slipping as its share in international reserves has fallen to 59%. This shift is particularly evident among the BRICS nations, who are actively pursuing alternatives like China’s yuan and digital currencies to reduce their reliance on the dollar.
Points
- The U.S. dollar’s share of global reserves has decreased to 59%, down from 72% in 2002.
- BRICS nations are leading the de-dollarization effort by promoting the use of their national currencies and creating alternative financial infrastructures.
- China’s Cross-Border Interbank Payment System （CIPS） is growing rapidly as part of this movement.
- The dollar remains dominant, but the push for alternatives like gold and digital currencies is gaining momentum.
The U.S. dollar, long considered the bedrock of global finance, is witnessing a significant decline in its role as the world’s primary reserve currency. In 2024, its share of global reserves plummeted to 59%, a sharp drop from its 72% share in 2002. This 13% decline over 22 years signals a notable shift in the global financial landscape, as countries, especially those within the BRICS bloc （Brazil, Russia, India, China, and South Africa）, actively distance themselves from the dollar.
This decline is particularly noteworthy given the context of global events such as Russia’s invasion of Ukraine, which has spurred countries to diversify their reserve holdings and reduce their dependence on the dollar. The euro, while still a significant player, holds only about 20% of global reserves, underscoring the dollar’s enduring dominance despite its shrinking share.
China, with its growing economic influence, has been at the forefront of the de-dollarization movement. The country has been aggressively promoting its Cross-Border Interbank Payment System （CIPS）, an alternative to the global financial messaging network SWIFT, which heavily relies on the U.S. dollar. CIPS has seen rapid expansion, with 62 new participants joining between June 2023 and May 2024, bringing the total to 142 direct participants and 1,394 indirect participants. While SWIFT remains dominant, CIPS is gradually positioning itself as a viable alternative, particularly for countries looking to bypass the dollar.
The push for de-dollarization is not limited to traditional currencies. Digital currencies and blockchain technologies are also being explored as potential alternatives to the dollar. The BRICS nations, in particular, are considering the development of cross-border central bank digital currencies （CBDCs） and currency swap agreements that could further reduce their reliance on the dollar. However, despite these efforts, the dollar’s dominance remains largely unchallenged in the near and medium term, according to the Atlantic Council.
The dollar’s strength lies not just in its share of global reserves but also in its deep integration into global trade and financial transactions. The infrastructure supporting the dollar is vast and well-entrenched, making it difficult for any single currency, including China’s yuan, to dethrone it in the short term. Moreover, concerns about China’s economic stability, its stance on the Russia-Ukraine war, and rising tensions with the U.S. and G7 countries have limited the yuan’s appeal as a global reserve currency.
In response to these uncertainties, some reserve managers are turning to gold as a way to de-risk their portfolios. While gold cannot replace the dollar, it is becoming an increasingly important component of global reserves as countries seek to diversify their holdings. The key to a currency’s status as a global reserve is its stability, liquidity, and the trust it commands among the global community—qualities the U.S. dollar continues to possess in abundance.
The International Monetary Fund’s （IMF） Special Drawing Rights （SDR） basket, which includes the dollar, euro, yuan, yen, and pound, still places the dollar at the forefront. Despite the growing discourse on de-dollarization, the dollar’s role as the primary global reserve currency appears secure for the foreseeable future, even as the world inches towards a more multipolar financial system.
解説
- The global financial system is slowly shifting towards a multipolar structure, with several nations pushing for alternatives to the U.S. dollar. This trend is particularly strong among the BRICS countries, which are actively seeking to reduce their reliance on the dollar through various means, including the promotion of national currencies, the development of alternative payment systems like CIPS, and the exploration of digital currencies.
- While the U.S. dollar’s dominance in global reserves is decreasing, it remains deeply embedded in global trade and finance. This entrenched position, coupled with the stability and trust it commands, ensures that the dollar will likely continue to be the world’s leading reserve currency in the near term, despite the growing interest in alternatives like gold and digital currencies.
- China’s efforts to promote the yuan and CIPS as alternatives to the dollar face significant challenges, including economic uncertainties and geopolitical tensions. However, these initiatives reflect a broader trend of countries seeking to diversify their reserves and reduce their exposure to the U.S. dollar, which could gradually erode the dollar’s dominance over time.
- The shift towards de-dollarization is likely to be a slow and gradual process, with the dollar continuing to play a central role in the global financial system for the foreseeable future. However, the increasing interest in alternatives underscores the need for the U.S. to maintain its economic and political stability to preserve the dollar’s global dominance.