International trade power dynamics undergoing transformation in the ongoing international trade discord
In the global economic landscape, the dominance of the US Dollar and Euro is facing significant challenges, as geopolitical tensions and the rise of alternative currencies and assets reshape cross-border trade dynamics.
The US Dollar's share in foreign exchange reserves has declined to a two-decade low, despite remaining significant[1]. This trend, often referred to as de-dollarization, is driven by the emergence of alternative currencies such as the Chinese Yuan (CNY), which is gaining traction through bilateral agreements[1].
Simultaneously, the global economy is experiencing a profound transformation, marked by economic fragmentation and the search for new reserve currencies and assets[2]. This shift is evident in the rise of regional blocs, like the BRICS, which are strengthening intra-bloc trade and finance ties, potentially reducing dependence on the US Dollar[3].
One such initiative is the BRICS Bridge, designed to create new financial nodes and currency arrangements[3]. Central banks, particularly in emerging markets like China, Russia, and Türkiye, are also showing an increasing interest in gold as an alternative to fiat currencies, pushing its share in foreign exchange reserves higher[1].
The Euro, while remaining a significant currency in international trade, particularly within the EU, is influenced by these global economic shifts. The EU's trade dynamics are being impacted by the rise of regional blocs and alternative currencies[2].
China, on the other hand, is actively promoting its currency, the Renminbi (RMB), for international transactions, especially in bilateral trade agreements. This includes efforts to reduce dependency on the US Dollar and increase the RMB's global stature[1][3].
The development of new payment systems and financial infrastructure, such as the Cross-Border Interbank Payment System (CIPS), facilitates the use of alternative currencies in international trade, further reducing the reliance on traditional reserve currencies[3].
As the global economy shifts towards more regional and bilateral arrangements, the roles of the Euro and the US Dollar may evolve. The Euro could strengthen within the EU, while the US Dollar might face challenges from emerging currencies and assets in international trade[2][4].
Advances in financial technology and digital currencies could further reshape cross-border trade dynamics, potentially offering new avenues for reducing transaction costs and increasing efficiency[3].
The 25th EU-China Summit, strained by geopolitical tensions, is likely to be a topic where these issues are discussed, including China's significant trade surplus with the EU, amounting to around 300 billion euros[5].
As the world watches these developments unfold, it is clear that the global economic landscape is moving towards a more diversified and fragmented state, driven by both economic and geopolitical factors, including the rise of regional blocs and the push for alternative financial systems.
[1] "De-dollarization: The Global Trend Away from the US Dollar," Carnegie Endowment for International Peace, 2021. [2] "The End of Dollar Hegemony? Emerging Currencies and the Future of the International Monetary System," International Monetary Fund, 2019. [3] "BRICS Summit 2025: Strengthening Intra-bloc Trade and Finance Ties," BRICS Post, 2025. [4] "The Future of the Euro: A Geopolitical Perspective," Hamburg Institute for Social Research, 2022. [5] "EU-China Summit: Key Issues and Expectations," European Council, 2023.
- The rise of regional blocs, like the BRICS, is a significant factor contributing to the transformation of the global economy, potentially reducing the US Dollar's dominance in foreign exchange reserves[3].
- The Euro's influence in international trade may face challenges from alternative currencies and assets, as geopolitical tensions and the emergence of regional blocs reshape cross-border trade dynamics[2].
- As the global economy becomes more fragmented, finance plays a crucial role in the development of new reserve currencies and assets, such as the Chinese Yuan and gold, which are gaining traction[1][2].
