US dollar, once hailed as the world’s most stable, least volatile and highly credible currency is slowly losing its credibility. The dollar-dominance is shrinking in the global financial market and the world nations are anchoring on alternative regional or domestic currencies for the purpose of bilateral and multilateral trade. This shift of trend in the world economy is silent and gradual, but ofcourse it is sharp and significant, ultimately acting as a thorn to dwindle the US hegemony.
The era of de-dollarization has begun; the saga of striking at the heart of the US hegemony has begun to unravel. One of the pivotal reasons for US being the global powerhouse and most dominated economy is because every economic transaction across the world was underpinned in dollars. Dollar was a paramount parameter and scale to determine the value of global trade and commerce. US has used dollar as a geopolitical pawn to script the path of the world economy as per its whims and fancies and to fulfill its hegemonic ambitions.
The unilateral world order under the rule of the United States, that was prevalent for more than a decade in the aftermath of the disintegration of the USSR, shattered more than a decade ago with the rise of China, India and other Asian economic giants and as well as more assertive geopolitics emerged from the Europe. However, it was initially difficult for this new multilateral world order to counter-weigh the dollar-denominated world economy. Dollar was perceived as the credible, stable currency and as a token of measure to determine the exchange rates in the international market. However, in the current decade, the trend is undergoing a drastic transformation. Global economies are rooting for other parameters and are evidently diverting their dependence away from the dollar as the world’s most reliable reserve currency and the reasons are many.
Countries are rooting for gold as the credible reserve than US Treasury bills
The latest comparison between the gold and the US treasury bills, as to what do the central banks across the world rely upon, exhibits a clear signal regarding the decline of the dollar dominance. As of September 1st, 2025, global central banks now have more gold as their credible source of reserves than US treasuries. This is a maiden such development since 1996, when the US hegemony had begun to envelope the world. Infact, few months ago, The Financial times had reported that central banks were seeking to depart themselves from dollar and were leaning towards gold. Here is a quick statistics as a testament to the declining dominance of dollar against gold and how gold purchase by the central banks is spiking year by year.
- In 2022, Central Banks across the globe, in total purchased 182 tons of gold.
- In 2023, Central banks purchased 237 tons of gold.
- In 2024, the gold purchase took a mammoth leap with 1180 tons of gold.
Cumulatively, the share of dollar in the global foreign exchange reserves has slipped from 70 per cent in 1990s to below 60 per cent as per the latest trends. Infact, according to some estimates, the share of dollar in global reserves is calculated at 46 to 58 per cent. On the other hand, the share of gold in the foreign exchange reserves is soaring day-by-day.
The example of the BRICS nations
The BRICS nations comprising of Brazil, Russia, India, China, South Africa and other emerging economies is currently outperforming as a strong counterweight to the US led hegemony with 40 per cent of global GDP. The growth and solidarity among BRICS member-countries has also irked the US President Donald Trump and he has repeatedly threatened to impose additional tariffs on BRICS countries if they go for de-dollarization.
Despite these irrational geopolitical compulsions, BRICS has taken a strategically independent path. In the financial year 2025, BRICS countries alone purchased 166 tons of gold only in the second quarter.
India as well, is gradually seeking to reduce its exposure to the dollar. For example, in the year 2024 India purchased US $242 billion worth of US treasury bills. However, it was reduced to $227 billion, in the year 2025. Meanwhile, India has added additional 40 tons of gold to its reserves. China which once accumulated a massive US $1 trillion worth of US assets, currently has reduced it to $756 billion.
Despite these trends depicting nations moving away from dollar, nations in the Global South holds remarkable quantity of assets denominated in dollar, probably trillions in numbers. But the trend is not in an upward trajectory. The BRICS nations and other economies of the Global South are gradually reducing their reliance on dollar and seeking for other credible options.
Not coincidental but a calculated move
The world economies championing for de-dollarization is not a coincidental factor. But a much calculated and strategically acknowledged path. The forces driving this de-dollarization act of the global economies are predominantly the domestic economic aspects, unraveling within the United States.
- Offshoot of the Russia-Ukraine war
In the aftermath of the outbreak of the Russia-Ukraine war, US and its allies have taken a path to weaponize dollar and has severely sanctioned the Russian economy that indeed has global economic repercussions. The US has freezed the Russian central bank reserves held within the sovereign territory of Washington DC. Moscow cannot utilize these assets for any purpose. This stringent move acts as a strong message to other countries. Incase of any geopolitical hustles in the future and if it is against the interests of the US, then Washington can utilize the sovereign assets of other countries invested in the US economy as a weapon to threaten. This can ultimately lead to a massive economic crash.
Thus world economies are steadily and gradually reducing their economic dependence on the US treasury bills or bonds and are seeking an alternative independent path.
- Inflation, fiscal deficit and spiking debt burden in the US
The US economy is currently not as stable as it was in the previous decades. Soaring inflation rates, deepening fiscal cliff and multiplying debt burden is gradually eroding the interests and trust of the investors about the US financial market. US bonds are no more deemed as safe havens.
The ambitious ‘One Big Beautiful Bill’ introduced by the US President Donald Trump, further escalates this trust deficit as the bill has raised the debt ceiling to US $5 trillion and has given space for more fiscal deficit. Thus, the belief that US financial market and dollar as a currency is most stable, credible and least volatile is gradually eroding and global markets are looking for alternative safe havens, preferably gold and trade in domestic or regional currencies.
Subsidence of dollar-dominance is not just an economic transition, but it is about shattering the US hegemony as the global economic powerhouse. With Donald Trump’s spiking tariff tussles, fueling trade wars, mounting fiscal deficit and debt burden there seems no sign of reclaiming the trust deficit about the US markets.
Meanwhile, the strategic calculations behind the independent path being erected by India and other BRICS nations, not just aim at securing the domestic economic sovereignty and security but also aim at restoring the balance of power in economic terms and not bow down to any kind of economic bullying and selfish geopolitical goals and hegemonic ambitions. The era of superficially bridging the trust deficit is quite not possible, because the world is cautious.
Ofcourse, dollar dominance is not vanishing in a year or so, it will stay, but definitely not in the long-run as world economies are smart enough to secure the sovereign path, debunk the weaponization of dollar and not fall for the geopolitical traps. The work to carve that sovereign path away from the dollar dominance has silently but confidently begun, be it in BRICS or anywhere else!
