AI-Driven Dollar Dominance: A New Monetary Order Takes Shape

The dollar's dominance may be reinforced by the growing use of artificial intelligence (AI) in global commerce, according to economists Chenxu Fu and Xianguo Huang. They point out that AI requires significant amounts of electricity to power data centers, which are often secured for long-term use through leases like the one signed by Anthropic with TeraWulf. This sets up a supply chain where compute is priced in dollars, forcing companies to source dollar liquidity.

The development of dollar-pegged stablecoins, such as Open USD, could further solidify the dollar's position in global commerce. These tokens are designed for programmable settlement and could become essential for AI-powered businesses that require rapid payments. The authors note that payment systems reward early network effects, making it likely that dollar-pegged stablecoins will become widely adopted.

The emergence of an 'energy-compute dollar loop' would tie together AI infrastructure, digital payments, and US financial markets in a self-reinforcing cycle. This would have significant implications for policymakers outside the US, who may struggle to reduce their dependence on the dollar even as they try to participate in global digital production.

The authors suggest that countries like those in the ASEAN+3 group could mitigate this by developing local data centers powered by affordable and clean energy, increasing access to compute for regional firms. They also recommend creating local-currency tokenized settlement systems for AI-powered commerce, which would reduce dependence on dollar systems and keep transactions transparent.