US dollar dominance secure; BRICS de-dollarization stalled: report

According to a recent study from the Atlantic Council’s GeoEconomics Center, the U.S. dollar maintains its status as the world’s primary reserve currency, despite efforts by the euro and BRICS countries to reduce global dependence on it.

The council’s “Dollar Dominance Monitor” underscores that the dollar continues to dominate in foreign reserve holdings, trade invoicing, and currency transactions worldwide, ensuring its position as the leading global reserve currency remains secure in the foreseeable future.

The report attributes the dollar’s enduring dominance to factors such as the robust U.S. economy, stringent monetary policies, and heightened geopolitical tensions.

Despite economic fragmentation prompting initiatives from BRICS nations to promote alternative international currencies, these efforts have not substantially reduced the dollar’s influence.

The imposition of Western sanctions on Russia following its invasion of Ukraine has accelerated discussions within BRICS about creating a currency union.

However, progress towards de-dollarization has been limited, as noted by the report. While China has expanded its Cross-Border Interbank Payment System (CIPS) significantly, attempts to establish an intra-BRICS payment system are still in early stages, constrained by the individualized nature of existing agreements within the group.

The report highlights that while China has actively supported the internationalization of the renminbi through swap lines with its trading partners, global foreign currency reserves’ share in renminbi has declined slightly, reflecting concerns among reserve managers about China’s economic stability and its geopolitical positioning.

Furthermore, the euro’s aspirations as a challenger to the dollar have waned, with investors seeking safer alternatives like gold amid concerns over geopolitical risks affecting both the dollar and euro. Issues including macroeconomic stability, fiscal consolidation, and the absence of a unified European capital market have also hindered the euro’s global role, according to the report.

In summary, while there are ongoing efforts by global players to diversify away from the dollar, current trends indicate that its dominance as the primary global reserve currency remains resilient, supported by economic strength and geopolitical factors.

Scroll to Top