De-dollarization: Is the US dollar losing its dominance? (2025)

Original Article ↗ Hacker News Discussion ↗

Observed shifts in dollar use

  • Commenters note USD share of global FX reserves falling from >70% in the 1990s to ~60% now, with a steady decline since ~2000.
  • De-dollarization is seen most in:
    • Central bank reserves diversifying (more EUR, some CNY, more gold).
    • Commodity contracts (especially energy) being priced in non‑USD.
    • Foreign ownership of US Treasuries dropping over 15+ years.
  • At the same time, the linked piece (as summarized) says the dollar still dominates FX turnover and trade invoicing, so “core dominance persists.”

Why de-dollarization is happening

  • Structural economics:
    • Discussion of the Triffin Dilemma: reserve status forces the US to run persistent trade deficits, overvalues the dollar, hurts manufacturing, and pushes debt up.
    • Some argue losing reserve status could eventually help rebalance the US economy, though the transition would be painful.
  • Policy and trust:
    • Repeated references to weaponization of the dollar and banking system (sanctions, asset seizures, Russia’s reserves) as a wake‑up call to other states.
    • Current US foreign and trade policy (tariff flip‑flops, attacks on Fed independence, threats toward allies, talk of annexations) is widely framed as unpredictable and corrosive to trust.
    • COVID-era monetary expansion is debated: some see it as catastrophic “money printing,” others as necessary crisis response largely offset by later tightening.

Alternatives and a multipolar system

  • No clear successor:
    • Yuan: hampered by capital controls, political risk, and limited convertibility.
    • Euro: more credible now but constrained by incomplete fiscal union and prior debt crises.
    • Other options (yen, CHF, gold, oil, SDR‑like baskets, BRICS unit, crypto/Bitcoin) are each criticized as too small, volatile, or politically fraught.
  • Many foresee a fragmented system: regional blocs (US, Europe, China/BRICS) plus mixed reserve portfolios (USD, EUR, CNY, commodities).

How fast could this move?

  • One camp: change is slow, inertia is huge, and US military, legal predictability and market depth keep the USD entrenched; Betteridge’s law invoked.
  • Other camp: “slowly, then suddenly.” They see recent US behavior and allies’ open distrust as a potential tipping point, with gold’s surge cited as a barometer of anxiety.

Wider implications and fears

  • Some think US elites are knowingly trading dollar hegemony for reshoring, tariffs and a more export‑competitive currency.
  • Others frame this as classic imperial overreach and institutional decay, comparing to late British Empire, interwar Germany, or the USSR; they worry a nuclear‑armed hegemon’s decline could be extremely dangerous.
  • Practical responses mentioned include shifting portfolios toward gold, non‑US equities, or non‑USD assets, but there’s no consensus playbook.