BCG Institute Says Dollar Demise Is Overstated as Yuan Trade Settlement Reaches 50%
Updated
Updated · Fortune · Jul 17
BCG Institute Says Dollar Demise Is Overstated as Yuan Trade Settlement Reaches 50%
2 articles · Updated · Fortune · Jul 17
Summary
BCG Institute argues the dollar’s recent weakness and broken safe-haven behavior do not signal the end of its reserve-currency dominance.
The report says reserve primacy depends less on exchange-rate levels than on deep safe-asset markets, full capital mobility, legal stability and geopolitical clout—burdens few rivals can shoulder.
The euro still holds about 20% of allocated official reserves, but lacks a Treasury-scale common safe asset and broader geopolitical reach, limiting its challenge.
China has lifted renminbi settlement of its trade to around 50% over 15 years, yet BCG says capital controls and a managed exchange rate keep it out of true reserve-currency competition.
Even if the dollar eventually loses primacy, the institute says history suggests a decades-long transition rather than a sudden collapse marked by default, hyperinflation or a cratering currency.
As central banks favor gold over US Treasuries, is the dollar's safe-haven reputation permanently damaged?
Can China's digital yuan challenge the dollar's supremacy while its markets remain tightly controlled?
Is the U.S. trading the dollar's global power for its own domestic economic goals?
The 2026 Currency Shift: Yuan’s Ascent, De-dollarization Drivers, and the Future of Global Payments
Overview
The global currency landscape is shifting as China actively pushes for the internationalization of the renminbi (RMB). In a major move, the People’s Bank of China began paying interest on digital yuan balances in 2026, making it the first central bank digital currency to offer this feature. Alongside this, the PBOC is enhancing infrastructure and encouraging financial institutions to improve international services. These efforts aim to boost the yuan’s global adoption, strengthen its influence, and reduce costs for Chinese companies. However, the yuan’s share in global trade remains below 10 percent, highlighting both progress and ongoing challenges.