Chennai: The US dollar will cease to be the global reserve currency in the next five to seven years, going by the pace at which countries are de-dollarising themselves. US President Donald Trump’s focus on industrialisation is also accelerating dedollarisation. A digital gold-backed Central Bank Digital Currency (CBDC) is likely to replace dollar as a reserve currency for global transactions.
“Every central bank intervention in the spot market is essentially a dollar asset dumping exercise,” says Anindya Banerjee, head of commodity and currency research at Kotak Securities. “If you can’t find buyers for your debt, you can’t sustain a model of printing money, creating debt, and borrowing at near-zero rates. That’s why the game is up.”
According to Banerjee, the ongoing trend of de-dollarisation is not merely a reaction to the US “weaponising” trade or finance, but a deeper breakdown of the dollar’s underlying economic model.
Post-Bretton Woods Agreement in 1944, it replaced the British pound as the world’s primary reserve currency. To sustain global demand, the dollar was effectively linked to oil trade, ensuring that countries needed dollars for energy imports—and by extension, for most global trade.
This system gave the US what economists call an “exorbitant privilege”—the ability to print money and finance consumption through debt, while the rest of the world accumulated dollar assets. Countries, particularly in the BRICS grouping, effectively subsidised US consumption by investing in low-yielding dollar debt.
However, cracks began to appear after the Global Financial Crisis. Consumer debt in the US peaked, and growth increasingly relied on government borrowing, pushing debt levels sharply higher. At the same time, global central banks reversed course—from being net sellers of gold to consistent buyers—signalling a shift in the monetary order.
Importantly, policy direction in the US itself is reinforcing this shift. Actions under Donald Trump—including higher trade tariffs, tighter immigration norms, and a push for domestic manufacturing—signal a move away from a model where the US exports demand and imports goods. “If America starts servicing its own demand, the need for a global reserve currency diminishes,” Banerjee argues, adding that such measures implicitly support de-dollarisation, regardless of stated policy intent.
In recent years, this transition has accelerated. BRICS+ nations have turned net sellers of US Treasuries, while central banks have ramped up gold purchases.
Meanwhile, countries are exploring alternatives. Bilateral trade in local currencies is expanding, supported by digital payment systems and discussions around central bank digital currencies (CBDCs), which is backed by gold and other commodities. At the same time, there is a growing strategic push to acquire natural resources—ranging from metals to energy—as countries hedge against currency risks.
Banerjee argues that the future will not be dominated by any single currency. Instead, the global system is moving towards a multipolar framework, potentially anchored by a mix of currencies and commodities such as gold.
“The dollar will not disappear,” he says, “but it will lose its monopoly.
