|
Getting your Trinity Audio player ready...
|
Key Takeaways:
- Dollar’s declining neutrality has forced countries to diversify reserves and trade currencies.
- Russia and China are leading a growing de-dollarization movement with strong economic ties and digital payment innovation.
- Digital and yuan-based settlements are reshaping global trade at an accelerating pace.
The US dollar’s once unchallenged Dominance in global finance is under siege as countries worldwide seek alternatives to what is now seen as a politically weaponized currency. Prominent Russian economist Sergey Glazyev has described Western currencies—including the dollar—as toxic tools of political warfare, sparking urgent financial shifts around the globe.
US Dollar’s Weaponization Spurs Urgent Currency Reassessment
Sergey Glazyev, a commissioner at the Eurasian Economic Union, has warned that the US dollar is no longer viewed as a neutral instrument of trade. In a candid interview with the Chongyang Institute for Financial Studies, Glazyev criticized the dollar, euro, pound, and yen as politically compromised currencies.
According to Glazyev, the yuan is now the only major IMF reserve currency not perceived as politically toxic. He noted that growing mistrust is reshaping global reserve policies and accelerating diversification away from the dollar.
Russia and China Lead the De-Dollarization Drive
The economic partnership between Russia and China exemplifies the practical response to dollar toxicity. Russian Foreign Minister Sergey Lavrov recently revealed that over 90% of bilateral trade between the two countries is now conducted in rubles and yuan. Since 2010, China has been Russia’s top trading partner, while Russia ranks among China’s top four.
This strategic shift underscores how both nations are insulating their economies from Western financial influence and aligning on shared financial technologies and settlement systems.
Yuan’s Global Use Expands Rapidly
China’s yuan is gaining ground in global finance. March 2025 data from SWIFT shows the yuan accounted for 4.69% of all international payments, making it the fourth most-used currency—surpassing the yen.
Experts view this as a clear sign of the yuan’s internationalization, driven by increasing demand for neutral trade currencies. This also reflects a broader trend toward foreign exchange reserve diversification as trust in Western currencies erodes.
Glazyev has suggested that Russia and China collaborate on a digital, non-banking payment system backed by commodities like gold and silver. Such a system would enable cross-border settlements without relying on the dollar.
With both countries already deploying central bank digital currencies (CBDCs), the shift to digital settlement frameworks is advancing. These systems promise to reduce transaction fees, bypass sanctions, and provide emerging markets with reliable access to global trade.
Perhaps most striking is the pace at which international trade norms are changing. Dollar-denominated transactions are being replaced by local-currency agreements and digital settlements. Countries are forging new corridors of commerce that bypass traditional Western financial systems.
According to Glazyev, this is not a fleeting reaction but a structural realignment. “China’s leadership in high-tech industries like AI and solar power further strengthens its role as a financial and industrial powerhouse,” he noted.
The global financial ecosystem is undergoing a transformative shift. The politicization of the US dollar has triggered a wave of strategic rethinking among nations, leading to increased reliance on the yuan, digital currencies, and commodity-backed systems.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
