NEW YORK, October 17, 2026 – In coffee shops all around Beijing and Mumbai, business treasurers are paying their cross-border bills in anything but the greenback. Bilateral trade deals that enable countries to pay each other off in their own currency have increased exponentially. However, despite the apocalyptic headlines suggesting otherwise, the reality of international central banking could not be further from the truth.
Settling a local bilateral transaction in rupees or yuan may be one thing, but holding billions of dollars in official reserves at central banks is another.
The most recent analysis by the International Monetary Fund on dollar dominance in the international reserve system highlights how there has been an evolving trend towards alternative reserve currencies for more than several decades now. At the end of 2023, the dollar’s share of allocated global reserves has dropped to 58%, compared to 71% in 2000. Nonetheless, no single currency has emerged to take up this slack. Central banks are merely opting for alternative currencies such as the Australian dollar and Canadian dollar.
So why aren’t these local trade agreements destroying reserve status overnight?
Liquidity. That’s the short answer.
If a country earns billions in surplus of its domestic currency due to its business relations with another country, it has to find a safe place, an open place, and a huge place to invest all these billions. The US provides a deep and clear capital market where foreign owners can easily purchase or sell billions of Treasuries at once. It is not easy for any developing country to provide this level of market depth.
Analysis by J.P. Morgan regarding de-dollarization proves that although de-dollarization exists in commodity payments and bilateral invoicing, there has been no significant change in terms of the structure of global reserves, which would take decades. The infrastructure behind the dollar is exceedingly strong.
This does not mean, however, that there are no cracks in the present system. Reporting on global multipolarity in finance demonstrates how sanctions and geopolitical divisions make non-aligned countries construct their own means of settlement. This year, when the US and its partners froze Russian central bank assets, it created reverberations all around emerging markets.
And this matters because central bank reserve managers are pragmatic. Central banks have been adding gold as an unfreezable hedge against geopolitical risk.
Businesses in local currencies have made it hard for the U.S. dollar to dominate daily transactions. However, until another nation comes up with a market that equals that of the United States in openness and trustworthiness, the dollar is here to stay.
