AI Fuels Rise of Dollar Dominance in Global Economy

A new era of dollar dominance may be emerging, driven by artificial intelligence and cloud computing. According to Chenxu Fu and Xianguo Huang, authors of a recent article in Project Syndicate, AI companies are quietly reinforcing the US dollar's position as the global reserve currency.

The process is similar to how the petrodollar became established in the 1970s, but this time it's being driven by commercial decisions rather than formal agreements. Cloud service providers are securing land and power resources, while AI companies package models into services and payment consortia build stablecoin infrastructure.

This 'energy-compute-dollar loop' is already underway, with data centers powered by electricity generating compute power, which enables the automation of business activities, including payments supporting programmable settlement. Stablecoin reserves are flowing into US Treasuries, creating a self-reinforcing cycle that connects AI infrastructure, digital payments, and US financial markets.

While no single government appears to be steering this process, regional countermeasures are being taken to limit reliance on the dollar. For example, ASEAN+3 countries are attempting to conduct trade in local currencies, connect national payment systems, and pool reserves to hedge against dollar shortages.