Will the world move away from the US Dollar?
Peter McGahan
Monday 24th March, 2025.
IT’S a big subject, so here is Part One of a series on dedollarisation. Please ask me questions as we go along over the weeks.
A pub question to me a year back: “Why do countries all use the same money if they’re not the same country?” Smart question, and one the world is beginning to ask itself.
It’s called dedollarisation, and it’s not just a buzzword tossed about by economists. It’s a real, unfolding shift which could reshape how the global financial engine hums. This column kicks off a new series where I’ll cover the “what,” “why,” and “what next” of this movement.
After the Second World War, the US dollar became the kingpin of global finance. It was pegged to gold, and every other currency pegged to the dollar. When Nixon removed that peg in 1971, it should have shaken the system, but it didn’t. Why? Because by then, oil was being sold in dollars, and global institutions like the IMF and World Bank were already firmly under the dollar's wing.
Michael Hudson (whose views I do like, because I think like that), a heavyweight thinker in this space, called it “super imperialism.” Sounds dramatic, but what he means is this: the US could run up debts, fund wars, and apply sanctions across the globe without having to feel the usual economic squeeze. Other countries, particularly those with trade surpluses, kept buying US Treasury bonds, like giving someone a credit card and then paying off their bill for them.
That "exorbitant privilege" helped the US live beyond its means. But like all privileges, it comes with an expiry date.
The tectonic plates of geopolitics are grinding and here's why the dollar’s grip is loosening:
The Dollar as a Weapon: Imagine you’re saving money in a bank, and one day the bank says: “We don’t like your politics, so we’re freezing your account.” That’s what happened to Russia in 2022 when over $300billion of its reserves were blocked. Other countries took note. The dollar is no longer neutral, it’s a geopolitical tool. This is not political, so please set aside any biases to grasp the point.
And so, a new global club has said – no thanks. The rise of China, the reassertion of Russia, and alliances like BRICS are building alternative financial ecosystems. More countries are ditching the dollar in trade - think Brazil and China settling in yuan, or India buying oil from Russia using rupees.
Systems like China’s CIPS or India’s RuPay, and big experiments with digital currencies (like the mBridge project), are being designed to cut the dollar out of the loop entirely. I am aware of other projects.
This isn’t just defiance, it’s self-preservation. Many countries, tired of being at the mercy of Washington’s decisions, are looking to reclaim control. Hudson calls it part of a broader move toward “de-neoliberalisation” (taking control back from corporations and lobbyists for example) and more focus on productive investment than speculative gains.
So, what Is Dedollarisation, exactly? It’s not one switch you flip. It’s a process - a slow, deliberate reshaping of how money moves. For example: Reserves diversification: Central banks, especially in China and Russia, are holding fewer dollars and more gold, euros, and yuan.
Non-dollar trade: Countries are signing currency swap deals - India with Malaysia, China with Saudi Arabia, Russia with Turkey.
New financial plumbing: Payment systems like Russia’s SPFS are being built to bypass SWIFT, the messaging backbone of dollar transactions. I may argue that Swift is in trouble. We’ll see.
Alternative assets: From cryptocurrencies to gold-backed payment tools, there’s growing appetite for stores of value outside the dollar.
Hudson doesn’t see this just as a currency story. It’s a systemic shift. A move away from speculative finance, and toward a more multipolar world where countries can control their destiny.
It wouldn’t be smooth sailing. It’s a big loss of power so….
The dollar is still deeply embedded in global trade. New systems need trust, liquidity, and convertibility, none of which are built overnight, but they are doing it.
The dollar isn’t dying, but its monopoly days may well be numbered.
If you have a financial question, please call 01872 222422 or email info@wwfp.net
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
