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Bloomberg recently reported that Chinese regulators are reining in their holdings of U.S. treasuries. Pension systems in the Netherlands and Denmark are shedding U.S. assets. Headlines question whether dollar dominance can persist amid stubborn inflation, political pressure on the Fed, and growing trade fragmentation.
But zoom into the blockchain world, and you see a different story. Many believe blockchains might actually extend dollar dominance globally through stablecoins—not because governments mandate it, but because individuals want to hold and transact in dollars.
If dollar influence is expanding through private digital infrastructure, how does the rest of the world respond?
Alisha Chhangani from the GeoEconomics Center at the Atlantic Council sat down with Amira Valliani to explore this question.
What makes the dollar dominant in the first place
The dollar’s status as the global reserve currency rests on several foundations. Deep liquid markets, especially Treasury markets, provide unmatched stability for central banks. Payment rails built over decades push the dollar globally. Legal and political institutions back the dollar with predictability. Military power matters too—though it’s not the only factor.
“The importance and the foundation of dollar dominance comes back to the legal institutions that back the dollar. The power comes back to the policy predictability of the dollar, the stability of the dollar.” — Alisha Chhangani
Even as the dollar’s share of global reserves has declined from 71% in 1999 to around 56-58% today, it remains by far the dominant reserve currency.
De-dollarization isn’t new, but technology is
Countries have been trying to reduce their dependence on the dollar for decades. China has expanded swap lines globally, providing liquidity for bilateral trade in local currencies.
That’s traditional de-dollarization, and it’s slow.
What’s changed is the infrastructure available to countries that want alternatives. China’s Project mBridge, incubated under the Bank for International Settlements, uses central bank digital currencies to enable wholesale cross-border payments between five central banks: China, Hong Kong, Thailand, the UAE, and Saudi Arabia. No dollar intermediary required.
“This would have not been possible five, ten years ago, but now with digital currency, it’s a new option.” — Alisha Chhangani
The Atlantic Council has tracked CBDC development across 130 countries, and the pattern is clear: financial technology is giving countries tools to route around the dollar that didn’t exist a decade ago.
The demand isn’t technology, it’s dollars
While governments experiment with ways to avoid the dollar, retail users around the world are moving in the opposite direction. Dollar-pegged stablecoins are spreading through emerging markets, driven not by policy, but by people who want access to a stable currency.
“It’s not government-led or government-reversed. People want access to liquid dollars.” — Alisha Chhangani
That bottom-up demand is what makes stablecoins different from previous waves of de-dollarization. Governments used to make deliberate policy choices to adopt the dollar. Now individuals are making that choice on their own, and stablecoins scale faster than central banks can track them.
The speed is what worries policymakers. Chhangani said central bank governors sometimes rank stablecoins as a bigger concern than trade volatility. “If three years ago you told me that central bank governors would be more concerned about stablecoins than tariff policy, I would think you were joking.”
The response has been a renewed push toward retail CBDCs. Countries that had shelved digital currency projects are picking them back up, wanting to offer citizens a public alternative before dollar stablecoins become the default.
Setting the rules from the top down
When asked directly whether stablecoins can save us from de-dollarization, Chhangani’s answer was no. “I think there are many things we have to do first before we can rely simply on stablecoins,” she said.
An area of significant interest for the Atlantic Council is regulatory clarity. The GENIUS Act, signed into law in July 2025, established reserve requirements and oversight rules for stablecoins issued under US jurisdiction.
Chhangani helps run the G20 Digital Assets Task Force at the Atlantic Council, which is developing policy recommendations for the US government on stablecoin standards. The US holds the G20 presidency this year, and the UK takes it next, creating a window for continuity between two jurisdictions that are both considered pro-stablecoin. “If it doesn’t work at the G20, we’ll take it to the G7,” Chhangani said, noting the US holds that presidency in 2027.
The second priority is upgrading the legacy correspondent banking network. If you were redesigning cross-border payments from scratch, you probably wouldn’t separate messaging and settlement the way Swift and CHIPS do today. China has already combined them in CIPS, its own cross-border system. The US Federal Reserve is participating in Project Agora, a BIS-led initiative exploring tokenized central bank money for cross-border payments alongside six other G7 central banks and over 40 financial firms.
Looking ahead: 2036 and beyond
When asked to peer ten years into the future, Chhangani believes the real question is how different digital assets—stablecoins, CBDCs, tokenized currencies—will interact with each other. Europe is pursuing both retail and wholesale CBDCs. The U.S. is pushing forward with stablecoins. What does global financial infrastructure look like when multiple countries have deployed their own digital currency strategies?
“What I think in 2036 that we will have to come to terms with is these different assets around the world, countries pursuing different ways of digitizing their currency. How are they going to interact? How are they going to remain interoperable?” — Alisha Chhangani
This article draws from Amira Valliani’s conversation with Alisha Chhangani, who works on digital assets and monetary policy at the Atlantic Council’s Geoeconomic Center. For the full discussion on how dollar volatility affects central bank policy, listen to the complete episode of Bits to Bricks.
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