The global financial landscape is undergoing a significant transformation as Asian economies accelerate their move away from the U.S. dollar.
This trend, known as de-dollarisation, is driven by a combination of geopolitical uncertainties, monetary policy shifts, and efforts to reduce reliance on the greenback in trade and investment.
The forces behind de-dollarisation
For decades, the U.S. dollar has dominated global trade and foreign exchange reserves. However, its share in global reserves has steadily declined from over 70% in 2000 to 57.8% in 2024.
This shift is particularly pronounced in Asia, where nations are actively promoting the use of local currencies to mitigate exchange rate risks and strengthen regional financial stability.
The Association of Southeast Asian Nations (ASEAN) has committed to increasing local currency settlements in trade and investment as part of its Economic Community Strategic Plan for 2026-2030.
Additionally, major economies like China and India are developing alternative payment systems to bypass traditional dollar-based transactions, further reducing dependency on the greenback.
Implications for the U.S. Dollar
The dollar has faced increased volatility, with a sharp 8% decline in the dollar index since the start of 2025. Investors and policymakers are recognising that the dollar can be leveraged in trade negotiations, prompting a reassessment of portfolios overweight in U.S. assets.
While the dollar remains the world’s primary reserve currency, its dominance is being challenged. Asian economies, particularly Singapore, South Korea, Taiwan, and China, hold substantial foreign assets, giving them the ability to repatriate earnings into local currencies.
The shift away from the dollar is a slow but steady process, signalling a broader transition towards a multipolar financial system.
Crypto and DeFi are playing a growing role in de-dollarisation.
Many nations, particularly within BRICS, are turning to digital assets to reduce reliance on the U.S. dollar in global trade.
How crypto supports de-dollarisation
Alternative Payment Systems – Cryptocurrencies like Bitcoin and Ethereum allow countries under U.S. sanctions to bypass traditional dollar-based financial systems.
Central Bank Digital Currencies (CBDCs) – Over 130 countries are exploring CBDCs to strengthen local currency transactions and reduce dependence on the dollar.
Stablecoins & Cross-Border Trade – Stablecoins such as USDT and USDC facilitate international payments, with daily transaction volumes exceeding $150 billion.
The bigger picture
The shift away from the dollar is not just about crypto – it’s part of a broader movement toward a multipolar financial system.
While digital assets provide alternatives, traditional financial institutions are also adapting by promoting local currency settlements
