The role of the US dollar in global trade is gradually fading as more developing economies push for payments in their own currencies and as US public debt continues to rise. This shift is widely discussed by financial thinkers and analysts, including prominent investor Ray Dalio, founder of Bridgewater Associates. He recently voiced his perspectives in an online interview featured by Business Insider.
Dalio notes that the dollar’s diminishing share in world trade goes hand in hand with a reduced appetite among Western policymakers and investors to rely on a single currency for cross-border settlements. He points to new risks created by Western sanctions on Russia, which have highlighted the possibility that dollar holdings can be frozen or constrained. In his view, central banks are increasingly cautious about accumulating large dollar reserves, viewing them as potential debt assets that may be exposed to political risk. The incident surrounding the freezing of about $330 billion of Russian assets underscored the fragility and unpredictability that can accompany dollar-based holdings.
Despite these concerns, Dalio emphasizes that the dollar remains the dominant reserve currency because it remains deeply embedded as the unit of account for most global transactions. At present, estimates suggest the dollar accounts for roughly 88 percent of overseas exchange activity. Yet, this dominance is not expected to be permanent: if concerns about dollar risk persist, the balance could tilt toward diversification and the use of alternative currencies in international trade and reserves in the coming years.
According to the viewpoint Dalio shares with other observers of the currency system, central banks in emerging economies are gradually reducing their willingness to fund deficits through dollar-denominated debt. This shifting demand alters the supply-demand dynamic for dollars in global markets and makes the international financing puzzle more complex. In this evolving environment, national policy choices, currency stability, and the trust in debt instruments interact in ways that could influence global liquidity and exchange rates. The broader message is that the question is not simply about a dollar losing status but about how a more multipolar monetary system could emerge, with various units of account gaining traction in different regions.
On a separate note, a Roscongress-linked report cited by RIA Novosti on April 18 discusses the idea of a currency capable of competing with the dollar and the euro. The report suggests that creating such a rival cannot realistically occur before the years 2035 to 2040. The analysis also notes that the space for a new dominant currency could be filled not only by a euro rival but also by the money units of other nations, reflecting a potential broadening of the set of widely used monetary benchmarks in world trade.