Dollar Dominance Monitor

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The US dollar has served as the world’s leading reserve currency since World War II. Today, the dollar represents 58 percent of foreign reserve holdings worldwide. The euro, the second-most-used currency, accounts for only 20 percent of foreign reserve holdings.

But in recent years, and especially since Russia’s 2022 invasion of Ukraine and the Group of Seven (G7)’s subsequent escalation in the use of financial sanctions, several countries have signaled their intention to accelerate efforts to diversify away from dollars.

This first-of-its-kind project on dollar dominance by the Atlantic Council’s GeoEconomics Center

Analyzes why the dollar is currently the world’s dominant reserve currency,
Presents indicators for tracking progress by members of the BRICS grouping of emerging economies in creating an alternative financial infrastructure, and
Creates a novel framework and data set for evaluating strengths and weaknesses of the world’s major currencies.

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.

“Dedollarization” rhetoric at the 2026 BRICS Summit remained subdued, as member states continue to navigate uncertain economic relations with the United States. However, the Summit’s communique indirectly raised concerns about exposure to the dollar system, addressing the use of tariffs and sanctions.

China leads dedollarization efforts within BRICS, as the renminbi dominates intra-BRICS trade. China has expanded its alternative payment system, the Cross-Border Interbank Payment System (CIPS), to 1,619 indirect participants and 210 direct participants. CIPS saw a spike in usage in March and April of this year, following the start of the Iran war.

The fundamentals of the dollar allow the US Treasury to both issue and buy back government bonds at a scale that is unique. As demonstrated by Treasury Secretary Scott Bessent’s recent buyback operations, debt management tools may temporarily affect bond yields, but the macroeconomic drivers of a currency will outweigh any intervention.

Tracking the dollar’s international use

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.

Treasury buybacks and the bond market

Bond yields in advanced economies have been surging this year, largely as a response to anticipated interest hikes due to energy-driven inflation and overall rising debt levels. In September, the average ten-year benchmark bond yield for Group of Seven (G7) countries hit 4 percent—the first time yields breached that point since 2008. In the United States, expectations of stronger economic growth and the capital spending on artificial intelligence (AI) buildouts have also had an impact on the bond market. Last month, US debt crossed $40 trillion, and with yields on the rise, the interest that the Treasury must pay on US debt will increase.

In response, Treasury Secretary Scott Bessent announced that he would be raising the buyback maximum for long-term Treasuries from $2 billion to $6 billion per operation to try and curb the long-term borrowing costs. However, effects didn’t last, partly because of how buybacks need to be telegraphed to manage investor reactions. The US increase was announced last minute, and after the announcement, the bond market expected the Treasury to raise that maximum higher than $6 billion.

This spotlight takes a closer look at the purpose of Treasury’s recent buybacks, buybacks as a debt management tool, and how the fundamentals of the dollar as the global reserve currency allows the Treasury to both issue and buy back government bonds at a scale that is unique. And yet, Bessent’s recent moves seem to show that while the dollar system is exceptional, the United States is still subject to certain constraints. Buybacks are a common debt management tool, but these kinds of interventions don’t directly address the macroeconomic conditions that drive yields in the first place. An activist approach to containing the bond yield could be ignoring important market signals about the reality of persistent fiscal deficits.

At the end of the day, the macroeconomic drivers of the dollar will outweigh any intervention that the Treasury, or even the Federal Reserve, can exert on bond yields. Domestically, higher yields affect the borrowing costs for Americans, famously on mortgages, but it will also impact the interest rates for companies raising capital, such as the current wave of AI hyperscalers. Globally, when rises in bond yields occur in conjunction with a rise in the US term premium and dollar appreciation, it can trigger capital outflows and other negative effects in emerging market economies. This outsized impact of the dollar beyond the US economy contributes to the discourse that other countries have about reducing their exposure to the dollar.

BRICS in India: key takeaways from the 2026 summit

The 18th annual BRICS Summit took place in New Delhi in September this year. Under India’s presidency, the grouping released its annual communiqué titled “Building for Resilience, Innovation, Cooperation and Sustainability.” Explicit “dedollarization” rhetoric remained muted both at the summit and in the text. However, the communiqué does take indirect aim at the financial leverage the dollar’s outsized role affords the US, raising concerns over tariffs and condemning the use of economic sanctions.

The declaration emphasized local-currency settlement and linked payment rails, continuing the BRICS Cross-Border Payments Initiative (BCBPI). The BRICS Payment Task Force will continue its work on interoperable payment and messaging channels and settling trade in members’ own currencies. This was framed as a practical way to lower transaction costs in bilateral trade, complementing – rather than replacing – the existing international payment and settlement system. This marks a notably more pragmatic tone than at the 2024 summit, when dedollarization rhetoric was more prominent. Ongoing geopolitical tensions and trade frictions with the US, which have particularly affected this group, appear to have encouraged the bloc to adopt a quieter and more measured approach.

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.

BRICS does not need to look far for inspiration

FOR A MESSAGING MODEL — SPFS
Russia’s System for Transfer of Financial Messages (SPFS) was developed in 2014 as an alternative to the widely used SWIFT messaging system. By 2024, SPFS was connected to 550 organizations across twenty countries, including China, Kazakhstan, and Kyrgyzstan. In Novemeber 2024, the US Treasury emphasized the risks of sanctions evasion associated with SPFS. However, SPFS still lacks SWIFT’s international connectivity and continues to have operational limitations.

FOR A CLEARING SETTLEMENT AND MESSAGING MODEL — CIPS
China’s Cross-Border Interbank Payment System (CIPS), launched in 2015, combines messaging and settlement for cross-border renminbi payments. As of December 2025, CIPS has 193 Direct Participants and 1,573 Indirect Participants. In 2024, the annual business volume was over $26 trillion. CIPS continues to be a part of China’s effort to internationalize the renminbi, and could serve as a model for BRICS Clear.

FOR A DIGITAL CURRENCY MODEL — mBRIDGE
Project mBridge is a cross-border digital payments network that connects Hong Kong, Thailand, the UAE, Saudi Arabia, and China through their central bank digital currencies (CBDCs). By November 2025, mBridge’s cumulative transaction volume had reached $55.49 billion, a dramatic increase from just $22 million in 2022. All founding BRICS members are piloting their CBDCs and they could leverage this project as a model for BRICS Bridge. In October 2024, Chinese state media stated that the new BRICS plan “is likely to draw on the lessons learned” from mBridge.

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. This could potentially provide mechanisms for BRICS members such as Russia and Iran to evade sanctions.

However, 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 is likely to persist, as the rotating presidency shifts priorities from year to year. Each presiding country brings its own strategic interests and economic sensitivities, with some member states being more cautious about significantly reducing ties with the United States and the dollar.

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: Jessie Yin, Lize de Kruijf, and Jack Muldoon
Contributions from: Alisha Chhangani, Emily Ezratty, Kyle Rutter, Delnaz Ghadiali, Laura Gallardo Suazo, Maxamillian Rajaobelina-Phipps, Oyinkansola Akin-Olugbade, Mary Kate Adami
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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