Dollar dominance remains strong in reserves, trade, and transactions

Key takeaways

The dollar’s role as the primary global reserve currency remains secure in the near and medium term. The dollar continues to dominate foreign reserve holdings, trade invoicing, and international currency transactions.

All potential rivals, including the euro, have a limited ability to challenge the dollar in the immediate future. While the dollar’s share of global reserves is on a modest long-term declining trend, its lost share has been distributed among several currencies.

BRICS members aim to leverage financial technology to create a multipolar global currency system. They are focused on building domestic digital payment systems and piloting cross-border applications to facilitate trade in local currencies.

Attempts to de-dollarize were seemingly scaled back at the 2025 BRICS Summit in Brazil, as member nations—facing some of the highest US tariffs rates globally—have become hesitant to publicly challenge dollar dominance. However, initiatives to build alternative payment systems continue under the radar, with sanctions evasion being a key motivator.

BRICS will only go as far to de-dollarize as China takes them. The renminbi was estimated to be used in almost 50 percent of intra-BRICS trade. China continues to expand its renminbi settlement mechanism, the Cross-Border Interbank Payment System (CIPS). In 2025, CIPS partnerships became more global with the largest banks in South Africa and the UAE joining.

US President Donald Trump’s trade policies are causing some countries to push forward with attempts to diversify away from the dollar, including China. The administration seeks to curb de-dollarization efforts by employing tariffs as a punishment. But BRICS members have continued their long-term pattern of reducing their dollar reserves and increasing gold holdings.

What does it take to be a reserve currency?  

The table below identifies the six essential qualities of a reserve currency. This new analysis evaluates the currencies included in the IMF’s Special Drawing Rights basket as well as the Indian rupee and Russian ruble against the criteria and allows us to demonstrate why the dollar is the global reserve currency.

Amid global economic uncertainties, could the euro go global?

Rising US debt, trade tensions, and geopolitical instability have renewed debate over the dollar’s dominance and whether the euro could serve as an alternative. While Europe offers institutional stability and appeal for trade diversification, limited joint debt issuance, fragmented capital markets, and external pressures from China undermine the euro’s global reach. Without stronger political unity and long-term strategy, the euro may remain regionally strong but constrained as a global currency. An in-depth analysis on the euro’s global potential can be found here.

The 17th annual BRICS Summit in Rio de Janeiro, Brazil, made little mention of de-dollarization. Instead, members reiterated financial cooperation proposals—including the expanded use of domestic currencies—that originated under Russia’s 2024 presidency. The main initiative highlighted in the July 2025 communiqué focused on continued thematic discussions around the BRICS Cross-Border Payments Initiative (BCBPI) strategy, also launched during the Kazan summit.

The BCBPI strategy encompasses three key projects: 

While these projects might offer efficiency and cost benefits to BRICS members, they would also enable them to settle transactions bypassing the US-led financial system. Therefore, the projects would provide mechanisms for countries such as Russia to evade sanctions, and others to evade secondary sanctions implications—inevitably diminishing the effectiveness of the US economic statecraft toolkit. Additionally, advancements in financial technology and payment infrastructure are now supporting the growing demand to “de-dollarize” among BRICS members.

While the recent communique mentions several financial mechanisms—including local currency financing through the New Development Bank and enhanced payment systems—the language emphasizes ongoing deliberations rather than implemented solutions.

These initiatives are still in formation phase and face challenges: 

• Many in the BRICS bloc are now more focused on managing trade risks, negotiating deals, and therefore avoiding spotlighting any de-dollarization efforts. Since the 2024 summit, the member states’ public ambitions have been significantly lowered.
  
• Proposals continue to deliberately avoid elaborating on the specifics, including on currency management and technical developments. These discussions could generate disagreements between BRICS member states on economic terms—as they evaluate their exposure to volatile or isolated financial markets—and on political terms as countries will want to avoid encouraging the internationalization of a geostrategic rival’s currency.
  
• Inconsistency in the BRICS de-dollarization agenda will continue as India, more cautious about severing ties with the US and dollar, takes on the presidency in 2026.

A scattered approach to dedollarization

This section provides a comprehensive analysis of each country’s dedollarization efforts. It identifies and tracks two key indicators of the strength of the alternative financial infrastructure China is building: China’s swap lines with the BRICS countries and membership in China’s Cross-Border Interbank Payment System (CIPS).

Acknowledgements

Authors: Alisha Chhangani and Lize de Kruijf
Contributions from: Oyinkansola Akin-Olugbade, Mary Kate Adami, Mondrita Rashid, Israel Rosales, Ryan Murphy, and Grace Kim
Visual design: Nancy Messieh, Andrea Ratiu, and Michael Currie
Thank you to Maia Nikoladze and Mrugank Bhusari for their work on originally designing, researching, and developing this project

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