De-Dollarization

The US dollar's status has always offered two unique advantages: unparalleled liquidity and the deep trust of global institutions. Since the end of the Second World War, nations have held dollars as reserves, settled trade in dollars, and watched as the currency became the hammer for American economic and political power.

- Rohtash Singh Chief Manager (Faculty) Staff Training College Union Bank of India Hyderabad,

For over eighty years, the US dollar has reigned supreme as the backbone of the world's financial ecosystem. Its position, cemented by the Bretton Woods system in 1944, spread from the vaults of central banks to oil contracts, trade invoices, and global investments. But geopolitical storms, technological innovations, and an assertive coalition of emerging powers-the BRICS group-are threatening to reshape this order in 2025. What is driving this upheaval, and what does it mean for the future of the dollar, global trade, and everyday life in the US?

Dollar Dominance: From Unchallenged to Contested

The US dollar's status has always offered two unique advantages: unparalleled liquidity and the deep trust of global institutions. Since the end of the Second World War, nations have held dollars as reserves, settled trade in dollars, and watched as the currency became the hammer for American economic and political power. In real terms, this dominance translates to lower borrowing costs for the US government and consumers and massive worldwide demand for US financial products.

Yet, this hegemony has come under scrutiny in recent years. The dollar's share of global foreign-exchange reserves has shrunk from over 70% two decades ago to about 58% today-a drop that isn't just symbolic. At the same time, the ability of the US to use currency dominance to impose sanctions or exert pressure on rivals has provoked new strategies among major emerging economies.

The Rise and Expansion of BRICS