Historically, from the birth of the euro to the internationalisation of the yen, and the currency experiments of some countries, progress has been slow due to the strong resistance of the dollar’s hegemony. This path dependence, institutional inertia, and the deterrent effect of hegemonic power determine that de-dollarisation cannot be a short-term sprint, and will inevitably be a protracted battle.
While the internationalisation of the RMB is progressing steadily, and it is expected to become the world’s third-largest payment currency by 2028, the gap with the dollar and the euro remains significant.
China’s position in the de-dollarisation process is that of a “participant, promoter, and builder”, not a “disruptor, challenger, or leader”.
This rational positioning dictates that we must proceed steadily with a long-term perspective. China never seeks the radical goal of “de-dollarisation”, but is committed to promoting the diversification of the international monetary system and building a more equitable, inclusive, and stable global financial order, which is in the common interest of all countries.
For China, advancing de-dollarisation hinges on three key tasks: First, accelerating energy transition and reducing path dependence on oil trade to fundamentally weaken the petrodollar’s foundation. This involves vigorously developing renewable energy, energy storage, and smart grids to increase energy self-sufficiency, reduce the rigid demand for oil in the transportation sector, and enhance energy security and economic independence.
Second, steadily promoting the internationalisation of the RMB, building a local currency settlement network, and breaking the dollar’s payment monopoly. This includes expanding the scope of bilateral local currency settlement agreements, improving the CIPS system, promoting the implementation of mBridge, increasing the proportion of RMB used in trade, investment, and reserves, and making the RMB an important pillar of the global multi-currency system.
Third, deepening multilateral cooperation, relying on multilateral mechanisms such as BRICS, the SCO, and ASEAN, building consensus on de-dollarisation, and jointly constructing a diversified international monetary system.
Looking ahead, the de-dollarisation process will continue to advance amidst twists and turns, and the formation of a diversified monetary system is an inevitable historical trend. By 2035, the dollar’s hegemony will be further weakened, and the RMB’s international status will be significantly enhanced, becoming an important global reserve currency, payment currency, and investment currency.
But political and economic divisions within the Eurozone, the instability of emerging market currencies, and the global financial market’s path dependence on the dollar all dictate that the formation of a multi-currency system requires decades of accumulation and adjustment, and cannot be achieved overnight. The global monetary landscape will exhibit characteristics of “dollar dominance and diversified coexistence”, and the US dollar will remain the world’s primary currency.
The ultimate form of the international monetary system is not the hegemony of a single currency, but the balanced coexistence of multiple currencies. This requires the joint efforts of all countries, and even more so, the test of time and history.
The Valdai Discussion Club was established in 2004. It is named after Lake Valdai, which is located close to Veliky Novgorod, where the Club’s first meeting took place.
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