Dollar Dominance Fades as Geopolitical Shifts Gain Traction
The US dollar's dominance in global trade and finance is facing challenges due to recent geopolitical shifts. Despite its transactional dominance in areas such as FX volumes and trade invoicing, the dollar's share of global trade has declined over the past three decades.
China is settling more trades in yuan, with a 28% increase in goods trade settled in yuan in 2025 compared to 12% in 2018. The BRICS nations are exploring a common currency to reduce their dependence on the dollar.
The dollar-centric system gives the US significant geopolitical leverage, including the ability to impose sanctions and control payment systems. However, this is gradually eroding as more countries learn to route around sanctions and invest in domestic and alternative cross-border payment rails.