Digital authorities firmly oppose the adoption of digital currencies
In the evolving world of global finance, the U.S. dollar's dominance is being challenged by a growing number of alternatives. These potential replacements include emerging-market currencies, the Chinese renminbi (RMB), digital currencies such as central bank digital currencies (CBDCs), and even a proposed new BRICS currency.
Emerging-market currencies have gained strength against the dollar in 2025, delivering their best returns in over a decade. This trend is partly due to looser U.S. monetary policy and cautious stances from developing countries’ central banks, making these currencies more appealing in carry trades and investments.
The Chinese renminbi is another significant alternative candidate, given China’s economic size, large trade surplus, and increasing internationalization. Although the RMB’s share in global reserves is around 2%, factors such as capital controls, geopolitical tensions, and limited full convertibility still constrain its global reserve currency role. However, its importance is expected to grow, especially among Global South countries.
Central bank digital currencies (CBDCs), like China’s e-CNY and the European Central Bank’s digital euro, are being actively developed to modernize payments and reduce reliance on the dollar. These digital currencies offer faster, cheaper cross-border settlements without dollar intermediaries, potentially reducing the dollar’s dominance in international finance.
A new BRICS currency, proposed by some member nations like China, Russia, and India, could emerge as an alternative. While it may not immediately displace the dollar, such a currency aims to support the shift away from dollar dependence in trade and reserves. However, experts suggest the dollar's dominance remains secure in the near to medium term, and no serious threat from BRICS currencies has materialized yet.
As these alternatives gain traction, central banks are turning back to gold, and the role of gold is changing. Countries have historically turned to gold in periods of instability, and today’s environment is no different. Europe, in particular, has a strategic opportunity to develop its own safe asset.
Despite these developments, many central banks are yet to embrace digital assets. Not a single central bank surveyed by OMFIF's Global Public Investor 2025 holds any digital assets, and 93% have no intention of doing so. This indicates that the dollar will likely remain the default currency for the time being, as other currencies will have to earn their higher status.
In conclusion, while the U.S. dollar still dominates global finance, multiple alternatives are emerging, contributing to a more multipolar currency system in the future. These developments underscore the need for central banks and policymakers to closely monitor and adapt to these shifts in the global currency landscape.
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