Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Personal Finance Gold De-Dollarization: What Is It, and Is It Likely to Ever Happen? Updated Aug 20, 2025 6-min read Written by Megan Hanna Written by Megan Hanna Expertise: Personal loans, home loans, credit cards, banking, business loans Dr. Megan Hanna is a finance writer with more than 20 years of experience in finance, accounting, and banking. She spent 13 years in commercial banking in roles of increasing responsibility related to lending. She also teaches college classes about finance and accounting. Learn more about Megan Hanna De-dollarization has been a frequent headline lately, often presented as a dramatic global shift. At its core, the term refers to reducing reliance on the U.S. dollar in trade, finance, and foreign exchange reserves. The dollar has held a unique role in the global economy for decades. In this article, we’ll explain what de-dollarization means, why the dollar became dominant, whether change is actually underway, and what the potential implications could be. Table of Contents What is de-dollarization? What is currently tied to the U.S. dollar? Is de-dollarization actually happening? What would happen if the dollar lost global dominance? How can individuals prepare or respond? How to stay informed about de-dollarization What is de-dollarization? De-dollarization is the process of countries reducing their dependence on the U.S. dollar in international transactions, reserves, and financial systems. It reflects efforts to diversify risk and avoid being overly tied to one currency. The dollar’s dominance began after World War II, when the Bretton Woods system established the U.S. dollar as the primary reserve currency, linked to gold. Even after the system ended in the 1970s, the dollar retained its central role in global finance. A reserve currency is one that governments and institutions hold in large quantities for global trade and investment. Today, the U.S. dollar serves as the world’s main reserve currency, accounting for the largest share of foreign exchange reserves tracked by the International Monetary Fund (IMF). This status gives the U.S. unique influence, but it also raises questions about what could happen if the dollar were to lose ground. Concerns about a U.S. dollar collapse often appear in media and market discussions, which is why understanding de-dollarization is important for context. What is currently tied to the U.S. dollar? The U.S. dollar’s role as the world’s reserve currency extends far beyond American borders. Its dominance shows up in multiple areas of global finance and trade, creating widespread reliance on the dollar system. Foreign exchange reserves: The IMF reports the dollar currently makes up the largest share of global foreign exchange reserves, accounting for about 57.7% of all allocated reserves. Global trade: Many international transactions—even between non-U.S. countries—use invoices calculated based on U.S. dollars. Commodity pricing: Oil, gold, and other commodities are typically priced in U.S. dollars, reinforcing its global role. Dollar-denominated debt: Borrowers with debt issued in a currency other than that of their home country often have it denominated in U.S. dollars (about 70% of foreign debt). Together, these connections make the dollar central to global financial stability. They also explain why talk of de-dollarization attracts attention—any shift away from the dollar would ripple through trade, investment, and debt markets worldwide. Is de-dollarization actually happening? Some countries are making efforts to reduce dollar reliance. In China, concerns about potential economic sanctions have fueled discussions about diversifying reserves, though the country still holds a large share of its foreign exchange in U.S. dollars. Central bank digital currencies (CBDCs) are another area of experimentation. These could, in theory, make it easier for countries to settle trade without using the U.S. dollar. However, most CBDCs are still in early development and not widely adopted. Despite these moves, the U.S. dollar remains dominant. No other currency currently matches its combination of trust, liquidity, and global infrastructure. Discussions about a global currency reset highlight these challenges, but a large-scale shift away from the dollar has not yet materialized. What would happen if the dollar lost global dominance? If the U.S. dollar lost its central role, the effects would unfold gradually, not overnight. For the U.S. government, borrowing money could become more expensive as demand for U.S. debt declined. That would make funding programs and paying interest more costly. For consumers, a weaker dollar could mean higher prices for imported goods. Everyday items like electronics, vehicles, or even groceries with imported ingredients might become more expensive. Inflation pressures could be felt more quickly. Global markets could also face more currency swings. Today, the dollar provides a common standard that reduces uncertainty in trade and investment. Without it, businesses and investors might have to navigate greater volatility, which could impact global economic stability. How can individuals prepare or respond? For everyday consumers, news about de-dollarization can sound alarming. In reality, any shift away from the dollar would likely be slow. The best way to respond isn’t panic—it’s thoughtful financial planning. Here are some steps worth considering: Diversify internationally Relying only on U.S. assets ties your portfolio to the dollar’s fortunes. Adding international stocks, bonds, or funds can spread risk and create balance if the global currency landscape changes. Investors can look to international index funds or ETFs from firms like Vanguard or Fidelity for accessible options. Consider real assets Gold has long been used as a hedge against currency volatility. Some investors also look at real estate or other tangible assets. For example, American Hartford Gold allows you to buy physical gold or roll over retirement accounts like a 401(k) or IRA into a gold IRA, which provides tax-advantaged exposure to precious metals. For real estate, REITs (real estate investment trusts) can give everyday investors a way to add property exposure without needing to buy and manage real estate directly. Maintain a balanced portfolio A mix of equities, bonds, and real assets cushions against volatility. It also means you’re not overexposed to any one sector or region, which is sound practice regardless of currency trends. For those unsure where to start, financial planners can help tailor a diversified portfolio to your risk tolerance and goals. Seek professional guidance Personalized advice can help you decide what strategies make sense for your situation. Free tools like Money Pickle can connect you with financial advisors who understand global risks and can tailor recommendations to your goals. These steps aren’t about predicting the dollar’s decline—they’re about building a resilient plan. By diversifying, balancing, and seeking guidance, you can feel confident your finances are prepared for different scenarios. How to stay informed about de-dollarization De-dollarization is a complex topic, but staying informed doesn’t have to be overwhelming. Focus on following credible sources, such as the IMF for reserve data and reputable financial news outlets for global trends. Reading thoughtful economic analysis provides context beyond the headlines. And when needed, checking in with financial professionals can help you put global shifts in perspective so you can make informed decisions with confidence.