Recent SWIFT data reveals that the US Dollar is cementing its status as the world’s go-to currency for global transactions, with its share of international payments hitting 49%, a 12-year high. In the past two years alone, the dollar’s usage in global transactions has risen by nine percentage points, defying a range of predictions that the dollar’s dominance would decline. Meanwhile, the Euro’s share of global payments has taken a significant hit, falling from approximately 39% to around 21%—the lowest it has been in a decade. These shifts have led to renewed discussions around the global financial landscape, including whether emerging currencies, especially from the BRICS nations, can realistically rival the dollar.
The dollar’s resilience comes amid growing geopolitical tensions and economic adjustments worldwide, where even the Chinese Yuan, while growing, still trails significantly. Over the past year, the Yuan’s share has increased from around 2% in 2023 to 5%, showing gradual international adoption yet still far from challenging the dollar’s supremacy. Despite numerous speculations about the BRICS alliance (Brazil, Russia, India, China, and South Africa) attempting to create a multilateral payment system to reduce dependency on the dollar, the dollar’s entrenchment in global finance presents a formidable barrier.
The Euro, often viewed as the dollar’s closest competitor, is seeing its influence wane. Factors contributing to this decline include internal economic instability within the European Union and concerns over energy dependencies, which have impacted global confidence in the currency. The Eurozone’s economic challenges have led to decreased demand for the Euro as a payment currency, reflecting broader uncertainty around the EU’s economic cohesion.
Analysts point out that the US Dollar’s dominance is likely a product of trust and stability that the US financial system provides. As global economies look for stability in uncertain times, the dollar’s role is reinforced, especially as it remains widely accessible and backed by a strong regulatory framework. The combination of a stable economy, transparent regulatory practices, and high liquidity make the dollar an anchor in global markets.
For BRICS countries to present a viable alternative, they would need to address significant structural differences and coordinate their financial policies, which are complicated by diverse economic agendas and trade priorities. While BRICS nations may explore ways to reduce their reliance on the dollar, effectively creating an alternative would require the development of a unified currency system or mutual settlements that bypass the US dollar entirely. As of now, the hurdles—political, economic, and logistical—remain substantial, and an alternative currency system would still need to gain the trust of global markets, which the dollar already holds.
While a gradual diversification of currencies in global trade could be beneficial, dethroning the dollar would require systemic changes that reach far beyond one or two nations’ ambitions. The dollar’s infrastructure, ease of use in trade, and robust backing mean that, despite challenges, it remains deeply entrenched in international finance. The road to any new currency standard would likely be long and complex, with no immediate signs of disruption to the dollar’s reign.