Innovation & Tech

The Dollar Is Losing

China and India launched tokenized cross-border payment systems in early 2026. Brazil and Russia are building theirs. By mid-2026,

By Conor Healy

March 24, 2026

China and India launched tokenized cross-border payment systems in early 2026. Brazil and Russia are building theirs. By mid-2026, three-quarters of G20 countries will have tokenized payment infrastructure bypassing the US dollar.

For 80 years, international payments required dollars. A company in India buying oil from Saudi Arabia converted rupees to dollars, sent dollars through correspondent banks, converted dollars to riyals. Every step involved fees. Every step took time. Giving the US leverage.

That’s ending. Countries are building direct payment rails that skip dollars entirely. India pays Russia in rupees. China pays Saudi Arabia in yuan. Brazil settles trade with Argentina in their own currencies.

The US dollar isn’t collapsing tomorrow. But its monopoly on international payments is eroding faster than anyone in Washington admits.

Tokenization Makes It Possible

Traditional cross-border payments are nightmarishly complex. A payment from Thailand to Mexico might touch 5-7 intermediary banks. Each takes a cut. Each adds delay. The money moves through SWIFT – a Belgian messaging system controlled largely by US and European interests.

SWIFT works but it’s expensive and slow. Payments take 3-5 days. Fees run 3-5% of transaction value for small amounts. For a Thai factory worker sending $200 home to family in Mexico, $10 disappears in fees.

Tokenization changes this. Governments create digital tokens representing their currency. These tokens move on blockchain networks or other distributed ledgers. No intermediary banks needed. Settlements happen in seconds or minutes instead of days.

Thailand’s central bank holds a reserve account with Mexico’s central bank. Thai businesses send tokenized baht. Mexico’s system instantly converts to tokenized pesos at agreed exchange rates. Direct. Fast. Cheap.

The technology has existed for years. What changed is governments actually building and deploying these systems at scale.

China and India Lead

The People’s Bank of China launched mBridge in partnership with central banks from UAE, Thailand, Hong Kong, and Saudi Arabia. The system handles real commercial transactions – not pilots or tests. Actual oil payments. Actual trade settlements.

mBridge lets participating countries trade using their own currencies without touching dollars. China buys oil from Saudi Arabia in yuan. Saudi Arabia receives yuan, converts to riyals through the system. No dollars involved.

India launched similar infrastructure with multiple partners. Indian companies pay for Russian oil in rupees. Russia uses rupees to buy Indian goods or converts to other currencies through bilateral agreements.

These aren’t small experiments. China processed hundreds of billions in cross-border payments through mBridge in 2025. India’s rupee trade with Russia hit tens of billions annually.

BRICS Expansion Accelerates It

BRICS expanded from five countries (Brazil, Russia, India, China, South Africa) to include UAE, Egypt, Ethiopia, and Iran in January 2024. Saudi Arabia participates without formal membership.

The expanded bloc represents 45% of global population and 35% of global GDP. More importantly, it includes major oil producers (Russia, Saudi Arabia, UAE, Iran) and major commodity buyers (China, India).

Oil historically traded in dollars. OPEC members sold oil for dollars. Everyone needed dollars to buy oil. This created structural dollar demand supporting its international dominance.

When Russia and Saudi Arabia sell oil to China and India in yuan and rupees through tokenized payment systems, that structural demand weakens. Countries need fewer dollar reserves. The petrodollar system – dollars for oil – erodes.

Remittances Drive Adoption

$656 billion in remittances flowed globally in 2023. Workers in rich countries sending money to families in developing countries. Traditional services charge 6-8% fees.

A Filipino nurse in Dubai sending $500 monthly to family in Manila loses $30-40 to fees. That’s $360-480 yearly just in transaction costs.

Tokenized payment systems cut these fees to under 1%. The Dubai-Philippines corridor could use UAE and Philippines central bank digital currencies. Direct transfer. Minimal fees.

The Philippines receives $40 billion in remittances annually. Even 2% fee reduction saves $800 million. That matters to families depending on remittances for food, housing, education.

Multiple countries prioritized remittance corridors in tokenized payment rollouts. UAE-India. Saudi-Pakistan. Qatar-Bangladesh. These corridors handle billions monthly.

When workers discover they can send money home for 1% fees instead of 6%, adoption accelerates. Network effects follow. More users make the system more valuable.

Washington Fell Behind

The US Treasury issued a report in early 2026 acknowledging other countries’ tokenized payment systems advance faster than American efforts.

The Federal Reserve explored central bank digital currency for years without deploying anything. The digital dollar remains in research phase while China’s digital yuan handles real transactions.

US policymakers assumed dollar dominance was permanent. Why rush when everyone needs dollars anyway? This complacency let competitors build alternatives.

By the time Washington recognized the threat, China already processed hundreds of billions through mBridge. India established multiple bilateral payment channels. Brazil and Russia were months from launch.

The gap widened because the US benefits from current dollar-based system. Change threatens that benefit. Other countries face high costs from dollar dependence. They had stronger incentive to build alternatives.

De-Dollarization Strategy

Russia accelerated de-dollarization after Western sanctions in 2022. Frozen dollar reserves and SWIFT disconnection forced Russia to find alternatives.

China supported this for strategic reasons. Reducing dollar dependence reduces US leverage. If the US can’t freeze Chinese dollar assets or disconnect China from SWIFT without destroying global payment systems, US sanctions lose power.

Brazil and other Global South countries watched Russia’s experience. They recognized dollar-based payment systems gave the US political weapon. Diversifying away from dollars became defensive strategy.

The tokenized payment infrastructure lets countries reduce dollar exposure while maintaining international trade. They’re not abandoning dollars completely. They’re creating optionality.

India still holds substantial dollar reserves. But India can now pay for Russian oil in rupees, trade with UAE in dirhams, and settle with Thailand in their own currencies. Less dollar dependence means less vulnerability to US policy decisions.

Trade Settlements Shift

Oil payments grab headlines but commodities trade generally is shifting. Iron ore, copper, agricultural products – all historically priced and settled in dollars.

Brazil sells soybeans to China. Traditionally Brazil received dollars, China paid dollars. Now they can settle in yuan or reais through bilateral payment systems.

This matters at scale. China imports $100+ billion in Brazilian commodities annually. Even 30% settling in non-dollar currencies represents $30+ billion in reduced dollar demand.

Multiply this across dozens of bilateral relationships. Indonesia and Malaysia. Turkey and Qatar. South Africa and India. Each bilateral payment channel reduces dollar transactions incrementally.

The shift isn’t dramatic. It’s gradual erosion. Dollar share of global payments drops from 88% to 85% to 82% over years. Each percentage point represents tens of billions in transaction volume.

Reserve Currency Implications

Countries hold dollar reserves because they need dollars for international trade and debt payments. If trade happens in other currencies, reserve needs change.

China doesn’t need $3 trillion in reserves if it trades in yuan. India doesn’t need massive dollar holdings if oil comes in rupees. Brazil can hold more yuan and rupees, fewer dollars.

Central banks globally held roughly $7 trillion in dollar reserves in 2024. A 10% reduction means $700 billion flowing out of dollars into other assets. That affects US Treasury demand, dollar exchange rates, and American borrowing costs.

The US benefits enormously from reserve currency status. It borrows cheaply because global demand for dollar assets keeps interest rates low. It runs trade deficits indefinitely because other countries need to accumulate dollars.

Losing reserve currency status doesn’t happen overnight. It’s a slow process. Britain remained important reserve currency decades after losing dominance. But the direction matters more than the speed.

Europe Watches Nervously

The euro benefits from dollar weakening but also faces risks. If countries build tokenized payment systems bypassing both dollars and euros, Europe loses too.

The European Central Bank launched digital euro pilots but faces internal disagreement on design and deployment. Privacy concerns, commercial bank impacts, and political disputes slow progress.

Meanwhile, European companies trading with Asia increasingly use yuan. European consumers in UAE use dirhams. The euro remains strong regionally but doesn’t expand internationally like China’s yuan.

Europe’s position is awkward. It benefits from multipolar currency world reducing dollar dominance. But it lacks infrastructure to capitalize on that shift. By the time Europe deploys competitive systems, bilateral channels may already dominate.

Gradual Erosion, Not Collapse

Tokenized cross-border payments won’t replace dollars completely. The US economy remains the world’s largest. Dollar liquidity is unmatched. Most countries hold some dollar reserves regardless of payment system alternatives.

But monopoly is ending. Countries have options now. They can pay in dollars when beneficial, use other currencies when cheaper or more convenient.

This reduces American leverage. Sanctions lose power when countries can bypass dollar systems. Freezing assets means less when those assets represent smaller portions of reserves.

The transition happens gradually. Five years from now, dollars might still account for 60-70% of international payments instead of 88%. That’s not collapse. It’s erosion.

For countries tired of dollar dependence, that’s enough. They gain breathing room. Reducing vulnerability to US policy decisions. They keep some dollar reserves but aren’t entirely dependent.

For the US, it means higher borrowing costs, weaker trade position, and less geopolitical leverage. The benefits of reserve currency status diminish even if they don’t disappear entirely.

The dollar is losing. Not dying. Just losing the monopoly it held for 80 years.