Everyone talks about countries “ditching the dollar.” China buying gold, BRICS making noise, a de-dollarization headline every other month. So let’s ask the question properly, from first principles: can anyone actually leave?
Short answer: probably not. But the reason why is more interesting than the answer. Because “the dollar” isn’t one thing. It’s a stack of five layers, and you’d have to beat all five at once.
The five layers.
One: trade invoicing. Most of the world’s trade — especially oil — is priced in dollars. Two: settlement plumbing. Money actually moves through correspondent banks in New York; SWIFT carries the messages, CHIPS clears the payments. Three: reserves. Central banks park their savings in Treasuries. Four: debt. Emerging markets borrow in dollars. Five: network effects. Everyone uses dollars because everyone else does.
Take gold: it attacks exactly one of these — reserves. It doesn’t touch the other four. That’s the whole game in one sentence.
So let’s walk the exits, one by one.
Exit one: trade in your own currencies. China and Russia settle in yuan and rubles; India and Russia tried rupees. The killer here is the surplus problem. If you sell more than you buy, you pile up the other guy’s currency — and then what? Yuan isn’t fully convertible, China’s bond markets are shallow and state-controlled. You’re holding an IOU you can’t freely spend. And bilateral pipes don’t scale: a yuan-ruble pipe does nothing for Brazil trading with India.
Exit two: crown a rival currency. The yuan dream. Here’s the trap, and it’s beautiful in a cruel way: to supply the world with your currency, you have to spend more than you earn — permanently. Economists call this the Triffin dilemma. China runs surpluses and loves control. It wants the crown without the costs. The euro already proved that even rich democracies stall at this wall.
Exit three: settle in gold. Here’s where the theory gets sharper. Gold works for savings, not payments. Modern trade runs on credit — 90-day terms, letters of credit. You can’t do that with bars in a vault. And a BRICS coin? Who issues it, who sets rates, who bails it out? India and China barely trust each other with a border, let alone a central bank.
Exit four: build rival plumbing. CIPS, mBridge, Russia’s SPFS. Necessary — but pipes without liquidity are empty. CIPS volume is a rounding error next to SWIFT and CHIPS. And dollar plumbing isn’t just pipes; it’s trust, deep markets, and New York courts enforcing contracts. You don’t rebuild that in a decade.
Exit five: crypto. The loveliest irony in finance: the most successful “alternative money” — stablecoins — are just dollars on a blockchain. Crypto didn’t escape the dollar. It digitized it. Bitcoin itself is too volatile and too slow to price global trade in.
Exit six: just leave. Shrink your exposure, trade inside your own bloc, eat the efficiency loss. This is Russia right now — oil at a discount, imports through back channels. It works. The price is being poorer than you’d be inside the system. Rational only if you’re already sanctioned.
The honest theory.
There’s no clean exit because the system is valuable precisely because everyone uses it. That’s what a network effect is: the moat is the crowd. Breaking it requires one of two things. Either the center does something so reckless that staying becomes scarier than leaving for most countries at once — defaulting on Treasuries, say, or freezing an ally’s reserves. Or someone builds a parallel system patiently for decades until it reaches critical mass.
Notice that’s exactly what China is doing. Not one exit — all of them at once: CIPS, mBridge, yuan deals, gold hoarding, BRICS. Slowly. Over decades.
So my theoretical prediction: no flip. A fraying. Dollar still dominant, with yuan corridors and gold reserves and digital bridges around the edges. A multipolar mess, not a new king.
Next, the other side of this: if nobody can leave the dollar, why does gold keep rising — and will it keep going?
References
- World Gold Council, Gold Demand Trends — central-bank reserve data behind the hoarding story