EXPLAINER - What is de-dollarisation, and could it really reshape global finance?

De-dollarisation, the move away from the U.S. dollar in global trade and finance, is no longer a fringe idea. As geopolitical tensions rise and new financial tools emerge, could this shift really transform the global economy?

What is de-dollarisation?

De-dollarisation refers to the process by which countries reduce their reliance on the U.S. dollar in global trade, finance, and foreign reserves. This can take many forms — from conducting trade in local currencies, to building up gold reserves, to developing alternative financial infrastructures.

Though the U.S. dollar still accounts for nearly 60% of global reserves and 88% of foreign exchange transactions, cracks in its dominance are appearing. The push for alternatives is no longer a fringe idea, it is now a policy objective for major economies such as China, Russia, and members of the BRICS bloc.

Why is the world rethinking the dollar?

There are several key reasons:

1. Geopolitical risk
The U.S. has used the dollar as a tool of power, from imposing sanctions to freezing reserves. While effective, this has raised alarm bells in countries wary of Washington’s influence, prompting them to seek financial autonomy.

2. Economic overdependence
Holding dollars or trading only in dollars makes countries vulnerable to U.S. monetary policy, inflation, and interest rate shocks. Diversifying currencies offers more control and stability.

3. Emerging powers
Nations such as China and India are asserting themselves on the world stage and want their currencies to play a greater role. China’s yuan is increasingly used in bilateral trade and has even become a payment option for Russian energy exports.

4. Digital disruption
Central bank digital currencies (CBDCs) and blockchain platforms are emerging as potential challengers to traditional dollar-based payment systems. Initiatives such as BRICS Pay and China's digital yuan are early signals of change.

Where is de-dollarisation already happening?

Trade: Russia now sells oil to India and China in local currencies. China’s Belt and Road Initiative is increasingly settled in yuan.

Reserves: Emerging market central banks — from Türkiye to Brazil — are stockpiling gold and reducing their dollar reserves.

Debt: The share of U.S. Treasuries held by foreign investors is down to 30%, from over 50% in the aftermath of the 2008 crisis.

Commodities: Some oil, coal, and gas trades are now priced in non-dollar currencies, challenging the petrodollar system that has long underpinned U.S. strength.

Could de-dollarisation collapse the dollar?

Not overnight. The dollar still dominates because of its deep liquidity, trusted legal system, and the sheer size of the U.S. economy. No other currency, not even the euro or yuan, yet offers the same combination of scale, stability, and global trust.

But the shift may not be about replacing the dollar, rather, it's about reducing overreliance on it. A multipolar currency world could emerge, where several strong regional currencies coexist, reshaping financial flows, risk management, and geopolitical leverage.

What would a post-dollar world look like?

• Trade would become more fragmented, with different currencies used across regions.
• Currency volatility may rise, as businesses hedge against more exchange rate fluctuations.
• U.S. influence could wane, affecting its ability to fund military power and impose sanctions.
• New financial alliances, like BRICS and ASEAN blocs, could grow stronger with shared platforms and settlement systems.

Final thoughts

De-dollarisation isn’t a doomsday scenario, but it is a significant recalibration of global financial power. The dollar’s reign is unlikely to end soon, but its grip is loosening as countries hedge their bets in an uncertain world.

As J.P. Morgan strategist Luis Oganes puts it:

“The world has become long on the dollar in recent years. But as U.S. exceptionalism erodes, so might the overhang in USD dominance.”

In other words, the age of dollar supremacy may not be over, but the age of dollar exceptionalism may be.

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