Johannesburg, South Africa – On a late November morning – two days earlier than leaders of the world’s main economies convened in Johannesburg for the 2025 Group of 20 summit – the governors of the South African and Chinese language central banks met simply 20 minutes away to inaugurate a system that many hope can assist transfer worldwide commerce out of the shadow of greenback dominance.
At a ceremony on the South African Reserve Financial institution in Pretoria that day, Normal Financial institution – Africa’s largest by belongings – turned the primary on the continent to hyperlink immediately into China’s Cross-Border Interbank Cost System (CIPS). This integration means African companies can now settle funds with China immediately in renminbi with out the usage of any middleman foreign money – notably america greenback (USD).
The USD has been the world’s principal reserve foreign money for the reason that finish of World Conflict II, and is utilized in greater than 80 p.c of worldwide commerce at this time.
However lately, speak of options to the dollar has been gaining traction, notably within the World South, and spearheaded by the BRICS group of growing economies, of which South Africa is a component, together with Brazil, Russia, India and China because the founding members. Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates have additionally joined lately.
Like South Africa, Brazil has additionally built-in into CIPS. On the identical time, it has more and more been utilizing the true and the yuan to settle bilateral commerce with China, resembling within the sale of soya beans, bypassing the USD.
Different international locations have additionally been leaning into the usage of native currencies. India and the UAE have traded in rupee and dirham, whereas China and the UAE have settled liquefied pure fuel (LNG) commerce in yuan. China has traded with others, together with Argentina, Iraq and Saudi Arabia, utilizing the yuan. And China and Russia have sharply shifted their bilateral commerce settlement into native currencies, partly as a workaround to bypass Western sanctions. China’s oil commerce with Iran and Russia has primarily been settled in renminbi. India and Russia have elevated the usage of roubles and rupees for his or her bilateral commerce.
As a bunch, BRICS can be pushing forward with its Bridge digital foreign money that, if profitable, would enable them to commerce bypassing each the USD and the Society for Worldwide Interbank Monetary Telecommunication (SWIFT) – a messaging community banks use to facilitate worldwide funds, which is closely influenced by US and European Union rules. Though the Bridge system will not be but lively, a working mannequin is predicted to be offered throughout this 12 months’s BRICS summit in India.
For analysts, bilateral commerce permitting international locations to set their very own phrases has all the time been a part of worldwide economics. So such endeavours aren’t new or sudden.
Nevertheless, they’re rising in frequency as there’s extra incentive to maneuver away from sole dependence on the USD, say analysts.
‘Hidden prices’ that profit the US
Whereas the US, because the world’s main economic system, has traditionally dominated world commerce, that affect has waned during the last decade, with China taking the lead, particularly within the World South, which accounts for 85 p.c of the world’s inhabitants and about 50 p.c of worldwide gross home product (GDP).
In Africa, for instance, China was the supply of a lot of the continent’s imports in 2024, adopted by the EU, India and the US, in response to the United Nations Comtrade database. For that motive, bilateral commerce in native currencies, or integrating CIPS, makes financial sense, analysts say.
“For each time you do a transaction within the greenback, there’s a hidden price that goes again to the US,” notes Sanusha Naidu, a international coverage analyst at South African assume tank, the Institute for World Dialogue.
Now, in response to the analyst, international locations around the globe have rightly began asking: “Why should we pay the US that price?”
As a substitute of the client’s native foreign money getting transformed into USD earlier than being transformed into the vendor’s foreign money, with each events risking shedding some income within the course of, cash can now movement immediately.
However for Danny Bradlow, a professor with the Centre for Development of Scholarship on the College of Pretoria, native foreign money commerce faces challenges; and these are much less about what is feasible and extra about what’s sensible.
Though two international locations can commerce in no matter foreign money they select, whether or not every celebration would need shops of the opposite’s foreign money is unclear, he mentioned.
For instance, if two international locations with not many transactions between them – like Botswana and Mexico – need to commerce items, it might be extra sensible for them to transform pulas and pesos into {dollars} to commerce with the in-demand USD than to maintain giant quantities of each other’s tender.
One other problem in bypassing the USD is that the “infrastructure that helps commerce settlement in native currencies should first be in place to make sure the broad adoption of native foreign money transactions”, mentioned Shirley Yu, managing director of ACME Macro Advisory and director of the China-Africa Initiative on the London College of Economics.
In addition to CIPS, she pointed to BRICS Pay (a decentralised monetary messaging and cost system designed for BRICS nations) and Mission mBridge (a multi-central financial institution digital foreign money platform), that are enabled by blockchain expertise. “The expertise infrastructure itself allows international locations to commerce in native currencies with out going by means of SWIFT or utilizing the greenback because the medium of alternate”, however these must be constructed up, she mentioned.
Though the variety of native foreign money transactions is rising, it’s nonetheless a fraction of what goes by means of SWIFT and the USD. The Chinese language foreign money remains to be concerned in lower than 10 p.c of worldwide commerce, as an example. Whereas different currencies, just like the European tender, are additionally in use globally, Yu famous that “the renminbi is an even bigger commerce settlement foreign money than the euro”.
‘Incentives’ to alter
However what has shifted and grown dramatically are “the incentives to alter and develop options”, mentioned Bradlow of Pretoria College, “and one of many methods you see that’s that the value of gold goes up a lot”.
International locations are now not treating the USD as a completely secure reserve foreign money; as a substitute, they’re managing and hedging their threat in opposition to it, says Naidu. The rise in gold and silver costs alerts this declining belief within the greenback, she provides.
Chris Weafer, an funding analyst with Macro-Advisory, a strategic consultancy that focuses on Eurasia, says political modifications within the US have led to this mistrust.
“President [Donald] Trump’s lack of predictability and the large US debt imply that the US greenback will not be as protected or as predictable because it was.” The US nationwide debt is at the moment greater than $38 trillion.
“However even with out Trump, many individuals around the globe – even within the West – would say that the function of the greenback is an issue,” Bradlow argued.
“Having a system that’s so closely depending on the greenback means … vulnerability to US financial and financial insurance policies. Shifting to a system that’s extra diversified or extra internationalised indirectly however not topic to 1 nation’s management could be extra acceptable to everybody,” he says.
However does that imply the top – and even the start of the top – for the US greenback?
Most analysts nonetheless say no.
“The US greenback will stay the worldwide reference foreign money, for instance, pricing oil or supplies, and could be the world central banks’ predominant reserve foreign money,” Weafer mentioned.
There are at the moment “no options to the US greenback when it comes to foreign money”, he mentioned.
However consultants additionally say a alternative for the USD will not be essentially what the World South and BRICS international locations are searching for. What they need is diversification and different or further commerce settlement methods – methods to get round SWIFT or a Western hegemonic system by means of which the US asserts its dominance.
Nevertheless, even these options “will nonetheless depend on the US greenback as a reference foreign money”, Weafer famous.
In the meantime, the US will even do all it might to guard the dominance of the greenback, Yu mentioned.
“President Trump desires to make sure the greenback’s world dominance, by means of the Genius Act,” she notes, referring to the US regulation that creates a framework for issuing and supervising US‑greenback stablecoins. A stablecoin is a cryptocurrency designed to keep up a secure worth by being pegged to a reserve asset, just like the USD.
“The greenback is prime to the US nationwide energy, subsequently, nationwide safety. The worldwide dominance of the greenback shall be protected in any respect prices.”
USD in a ‘gradual burn’ decline
Though the USD faces no actual competitors and can keep its place, for worldwide relations knowledgeable Naidu, the talk enjoying out is about extra than simply the “onerous foreign money” worth of the greenback. It’s concerning the rise and fall of countries and the way hegemonic energy tends to peak and unravel after 70-80 years.
The USD, just like the US empire itself, is a “wounded hegemon”, she mentioned.
When a hegemon turns into wounded and feels its dominance challenged, “it turns into very harmful and unpredictable”.
Naidu mentioned the 4 pillars of US structural energy – safety, finance, data and manufacturing – have all been anchored within the greenback. As extra international locations develop into risk-averse to the greenback, and as different cost methods emerge, these pillars weaken.
So whereas the USD will not be about to be abruptly changed, it’s present process a “gradual burn” decline, she mentioned, arguing that that is extra harmful and consequential than if it had been a fast collapse.
Though the world is a great distance away from having one other foreign money to rival the greenback, if one had been to emerge within the “very long run”, many consultants say it may be China that’s subsequent in line.
If international locations lose confidence within the US economic system, political management and greenback, “finally, it will likely be the rise and larger use of the Chinese language yuan that may break the worldwide dominance of the US greenback,” Weafer mentioned, particularly within the World South.
Yu mentioned “the size of dedollarisation will definitely develop amongst World South international locations”, particularly within the mild of latest geopolitical occasions in Venezuela, and US tensions with Iran.
However “the quantum shift for the worldwide foreign money structure will occur when the petroyuan replaces the petrodollar”, she added, referring to a state of affairs the place the yuan turns into the foreign money used for world oil pricing and settlement – a operate at the moment carried out by the USD.
“This occasion, if it does occur, will sign the top of the US greenback as the worldwide central reserve foreign money,” Yu mentioned, noting how China’s oil commerce with Iran and Russia over the previous few years has already largely been performed in renminbi.
The underside line, in response to analysts, is that there is no such thing as a imminent and even medium-term risk to the USD, however that’s much less due to something the dollar is doing proper, and extra as a result of worldwide commerce, for probably the most half, has few different choices in the mean time.
