The role of the US dollar on international financial markets does not decrease. The coin has even become more dominant in the last three years. The Chinese Renminbi (or Yuan) is becoming more important, but the backlog on the dollar is still very large.
This is evident from Investigation by the Bank for International Payments (BIS) that was released this Tuesday. The BIS, who plays a coordinating role between the central banks, conducts this research every three years. It was done in April this year, when US President Trump was in office for three months.
Following the disruptive economic policy of Trump- high import taxes, large budget deficits, attacks on the central bank- economists, investors and central banks have recently been discussing a possible decline in the dollar as an international payment and reservo currency.
Such a development is not yet visible in the BIS study. The dollar was part of 89.2 percent of all traded currencies (dollars against euro, or Swiss franc against pound Sterling for example). That is slightly more than the 88.4 percent in 2022 and the 87 percent in 2013. The euro gives some terrain, by 28.9 percent now, compared to 30.6 percent in 2022 and 33.4 percent in 2013.
The importance of the Japanese yen has fallen sharply in the past twelve years. This also applies to the Pound Sterling. More action is taken in the Swiss Franc.
Renminbi wins
The big winner on the currency market is China. The Renminbi is working on a steady increase. In 2013, the Renminbi was involved in 2.2 percent of all transactions. Last April that was 8.5 percent. If the Hong Kong dollar is included – which can be seen as a ‘access currency’ to China – then profit is even greater.
The increasing use of the Renminbi as an international payment method was already noted this year in A report from the European Central Bank. In 2012, the currency was not often used for payment of Chinese import and export: in less than 10 percent of the payments in goods trade and around 15 percent for services. In 2024 that was shot up to 38 and 47 percent respectively. Within the Swift platform, which banks use for international transactions, was still 2 percent of the payments in Renminbis in 2017. Last year this was 6 percent, the same as in euros.
A factor in the growth of the role of the Renminbi as a means of payment is the sanctions that the West issued against Russia after the invasion of Ukraine in 2022, writes the ECB. In the rapid trade between China and Russia, both countries avoid the dollar and pay them in Renminbis.
Reserve
The US dollar is not only means of payment number one, but also the most important international reserve currency – the unit in which central banks hold reserves. That offers the US all kinds of benefits. For example, the country can borrow cheaply: investors who want to park their money safely are willing to receive a low risk fee (interest) on US government bonds. Because the dollar is used a lot in commercial transactions, American companies have little trouble with exchange rate fluctuations. The US can impose financial sanctions on countries that do dollar transactions (read: to the entire world). French former President Valéry Giscard d’Estaing spoke in 1965 (then he was still finance minister) of an “exorbitant privilege” that the Americans enjoy with their dollars.
The bis figures reflect all transactions on the financial markets, between banks, investors and, for example, large companies. Other data show that the position of the dollar in the global economy is certainly under pressure. For example, 57.7 percent of the currency reserves of central banks existed in the first quarter of this year from dollars, Thus the International Monetary Fund. Ten years ago that was much more: 66 percent.
Risk risk
A trend of diversification has been visible for years: central banks spread their risk over different coins and gradually reduce their dollar reserves. Here, certainly in the case of non-Western countries such as China and Russia, geopolitical reasons also play. It is not the euro – for many years reserve currency number two – that has benefited from this diversification. The euro is now good for around 20 percent of the reserves – as many as ten years ago.
The advance of the Chinese Renminbi in the international currency reserves is disappointing. The currency was admitted by the IMF to the ‘basket’ of reserve currency in 2016. Since then, the Chinese share in the international currency reserves has risen from 1.1 percent to 2.8 percent in 2022. After that, the Renminbi became less popular: the share in 2.1 percent in the first quarter of 2025. That reflects caused by central banks about the Chinese economy, which has been disappointing since the pandemic.
Central banks became more interested in, among other things, the Japanese yen and the Canadian dollar. Another striking trend: Gold has also made a rise as a reserve unit in recent years, especially in countries that “have geopolitics distance to the West,” said the ECB report.
In the Trump II era, the debate about the international position of the dollar has been given a new charge. Due to Trumps whimsical trading policy, risky budget policy and his involvement with the central bank have started to doubt the solidity of the American economy – and thus the American currency. The value of the dollar has fallen considerably since Trumps. Compared to a ‘basket’ with coins of the most important trading partners of the US, including the Euro and the Yen, the dollar has become 9.7 percent less since the beginning of this year.
Strikingly enough, a weaker dollar is also what the Trump government has said to achieve. She believes that American companies pay the price for a strong currency: American export is expensive, which is damaging the international competitive position of business in the US.
Stablecoins
At the same time, Trump wants to preserve the position of the dollar as an international reserve munt – and the privileges that go with it -. A central idea here is that Stablecoins, published by commercial companies, must further support the dominance of the dollar. Stablecoins are crypto coins with collateral, making them in principle stable. They are usually linked to a traditional mint, in this case the dollar. You can easily do transactions with it. When using Stablecoins, the demand for dollars increases, after all necessary for collateral.
The European Central Bank fears that Dollar-Stablecoins will ensure that the dollar will play a stronger role within Europe, which undermines the effectiveness and sovereignty of monetary policy.
Central banks work on their own digital coins worldwide-but then through the public, non-particular road. For example, work is being done on a digital euro, a digital pound and a digital renminbi (‘e-Yuan’). The Chinese authorities in particular are explicitly in their ambition to undermine the dominance of the US dollar in Asia via this route. China is also a member of the BRICS group. These club countries, including Russia, India and China, have been talking about a ‘Brics-Munt’ for some time as an alternative to the dollar. Trump has threatened the group with heavy import duties if it continues the plan.
NEW: Give this article as a gift
As an NRC subscriber you can do every month 10 articles Give a gift to someone without an NRC subscription. The recipient can read the article directly, without a payment wall.