"The long farewell to the US dollar" VIJAY PRASHAD

July 23, 2026

Dear friends,

Greetings from the Tricontinental Institute for Social Research.

There are moments in history when a system appears so complete that it becomes difficult to imagine its end. When Britain "ruled the waves," much of the world believed that sterling was not merely a currency but the very natural language of commerce. Since the mid-20th century, the United States has regarded the US dollar in much the same way. In 1980, amid the crisis of the post-Bretton Woods order, Argentine economist Raúl Prebisch observed that "in the United States, the illusion of the almighty dollar prevailed." At that time, however, this was not merely an American illusion. The dollar had already become the world's leading reserve currency and the dominant currency in international trade. Now, that illusion has begun, slowly and unevenly, to unravel.

Our latest dossier, The Architecture of Power: The Dollar, Financialization, and the Struggle for Sovereignty, demonstrates that the dollar is not merely money but an institution of imperial power. The dollar system organizes trade, determines access to credit, disciplines governments, finances wars, and reproduces a hierarchy between the Global North and South. The debate over the dollar, therefore, is not simply about preferring one currency over another — the dollar over the renminbi (RMB) or the euro — but rather about questioning whether humanity can build an international monetary order that serves development rather than domination.

In recent years, the temptation has been to answer this question prematurely. Every bilateral agreement settled in RMB instead of dollars, every BRICS+ announcement on local-currency trade, every increase in central bank gold purchases has been met with declarations that de-dollarization had arrived. Headlines are seductive, but the reality is considerably more complex. One of the great merits of our dossier is precisely its refusal to confuse political desires with economic reality.

At the same time, something profound has shifted. The United States has increasingly transformed the dollar from an instrument of exchange into an instrument of coercion. Financial sanctions, sovereign reserve freezes, exclusion from payment systems, and the instrumentalization of international finance have demonstrated to Global South governments that dollar dependence entails growing political risks. When roughly half of Russia's foreign exchange reserves were frozen, many finance ministries around the world silently asked themselves something that had previously seemed almost unimaginable: if this can happen to Russia, why not to us? The dollar, once presented as politically neutral, has revealed itself to be deeply embedded in US strategic objectives.

The dollar continues to dominate the world economy not because the United States produces most of the world's goods — which it does not — nor because it accounts for most of world trade — which it also does not. Rather, the dollar dominates the world economy because the international financial system is built around it and because markets constructed over generations generate immense network effects. Reserve currencies cannot be reduced to means of exchange. They are also stores of value, units of account, settlement mechanisms, and the foundations upon which vast financial markets are built. Governments hold dollars because other governments use dollars, and banks lend in dollars because borrowers expect to repay in dollars. As the dossier carefully demonstrates, the dollar continues to account for the bulk of commodity pricing, foreign exchange transactions, official reserves, and trade finance, even as the relative economic weight of the US has steadily declined. This contradiction — between the decline of US productive weight and the dollar's continued centrality — is what makes the debate over de-dollarization urgent.

Although much of the industrial dynamism of the 21st century now lies in Asia rather than the North Atlantic, finance remains organized around Wall Street. Production and finance operate across different geographies, and this divergence cannot resolve itself automatically. The opening of a gold vault in Hong Kong, for example, demonstrates the rapid expansion of precious metals storage and trading infrastructure in Asia, but such developments do not, by themselves, create a new monetary order. Britain remained the world's financial center long after its industrial supremacy eroded, and the US continues to enjoy "exorbitant privileges" through the global use of the dollar, long after its share of manufacturing has plummeted. The decisive question is not whether the dollar system is in decline — it is — but what could realistically replace it.

However, the transition beyond the dollar will depend not only on economic shifts but also on innovation and institutional construction. In his recent article Geopolitics and International Money — A Path to a New Reserve Currency, former IMF Executive Director and former Vice President of the New Development Bank, Paulo Nogueira Batista Jr., poses the question: what institutional architecture would be necessary to build an alternative to the dollar system? Nogueira Batista argues that the RMB will not simply replace the dollar, which would be neither likely nor desirable. The Chinese government has little interest in such a move because it would require much greater capital account liberalization, allowing capital to flow more freely in and out of China. This could expose the country to destabilizing financial flows, raise the value of the RMB, make Chinese exports more expensive, and weaken precisely the productive advantages that made China's development possible. Chinese economist Yu Yongding has put forward important proposals for expanding the international use of the RMB, including in the context of BRICS+ debates on de-dollarization, but even these proposals do not suggest replacing US monetary hegemony with Chinese monetary hegemony.

Over the past decade, bilateral and multilateral currency settlement systems have expanded rapidly. These include Russia's Financial Messaging System (SPFS), developed in 2014; China's Cross-Border Interbank Payment System (CIPS), launched in 2015; local-currency settlement frameworks such as the agreement between Indonesia, Malaysia, and Thailand, established in 2018; central bank swap agreements that allow countries to access each other's currencies in times of need; and specialized accounts, such as Gazprombank's K-accounts, which enable certain cross-border payments to bypass dollar-based channels. While these instruments have not yet replaced the dollar system, they are part of the infrastructure from which a new financial order could emerge.

Nogueira Batista puts forward a more ambitious plan for the gradual construction of a new reserve asset, collectively created by a coalition of Global South countries, backed by a new international institution, and designed exclusively for international settlements and reserve holdings, not for domestic circulation. Such a currency would not abolish national currencies but would function as a common reserve instrument capable of reducing dollar dependence. As our dossier argues, the importance of institutional alternatives to the dollar lies not in the immediate replacement of one monetary framework with another, but in building enduring infrastructures capable of reinforcing humanity's emancipation.

Yet institutions alone cannot exhaust the deeper question. The weakening of the dollar-centered order raises a larger problem than the design of a new reserve currency or a different payments architecture. The central problem is not merely monetary but developmental. The institutions that emerged after World War II organized global finance around the protection of wealth rather than the transformation of production, rewarding speculation while constraining industrialization across much of the formerly colonized world. A new monetary order must therefore be assessed not only by exchange-rate stability but by its capacity to finance structural transformation, technological upgrading, food sovereignty, ecological transition, and decent employment. Capital controls, development banks, payment systems, and reserve assets must serve to expand productive capabilities rather than accumulate financial claims. In this sense, the successor to the dollar regime cannot simply replace one international currency with another. It must embed finance within a broader development architecture, so that monetary cooperation becomes an instrument for shared prosperity, sovereign development, and the reduction of global inequality.

Money is fundamental to everything in our world because so much of life has been commodified and subjected to the discipline of the capitalist market. Water is bottled and air is conditioned, while nostalgia for barter remains on the margins of all negotiations. The dollar looms over us, and behind it stands the vast US military arsenal and the political will to use that force to defend its currency. When Washington Irving wrote about the "almighty dollar" in The Creole Village (1837), the phrase was premature. In our time, it has become almost natural. The wealth of the South's resource-rich countries flows out in dollars and returns as debt, while the unreal cities of money, like London and New York, glitter with the world's social wealth.

But there is a tremor here and there, as our dossier indicates. We do not wish to exaggerate the reality of de-dollarization: we wish to show how the dollar regime continues to operate today, how it has weakened, and why it remains structurally intact.

Sincerely,

Vijay Prashad