For a long time, the dominance of the dollar defined global finance. But the system is facing its first real structural test in decades as central banks attempt to reimagine cross-border payments with cryptocurrencies and AI. This change could redefine global liquidity and confidence pricing. According to IMF COFER data, the dollar’s share of global foreign exchange reserves at the beginning of 2025 will be 56.32%, the lowest since the creation of the euro. Meanwhile, 94% of financial authorities are testing central bank digital currencies. This suggests the diversification and digitalization of the country’s money.
The arrival of AI in financial infrastructure will accelerate this change. The Bank for International Settlements has warned that autonomous trading and liquidity algorithms could increase systemic risk. At the same time, new digital rails promise cheaper and faster travel. Legacy networks built with dollars are quietly eroding.
Indicators of permanent changes in dollar dominance
BeInCrypto spoke with Dr. Alicia García Herrero, chief economist for Asia Pacific at Natixis and former IMF economist. Based on 20 years of macro research, she explains how CBDCs, AI, and stablecoins have the potential to reclaim the world’s financial power. She also outlines which metrics will reveal that pivot first.
The dollar still supports foreign exchange reserves, but it has begun to erode. COFER data shows a steady decline since 2000. The question is no longer whether an alternative will emerge, but when the change becomes measurable – when investors can observe the timeline in real time.
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“Since our time at the IMF, when we were analyzing COFER data, we have been tracking the US dollar’s share of global foreign exchange reserves (56.32% as of Q2 2025), along with the appreciation of the renminbi and euro, as well as CBDC pilots in which 94% of central banks are participating.As the BIS has warned, the volatility of cryptocurrencies can amplify AI-driven risks. However, CBDCs offer a controlled shift. The USD will decline by 55% by 2027, and over $1 billion in annual CBDC payments shows persistence. Stablecoins will support dollar stability without volatility.”
Her criteria, a decline of less than 55% and billions of dollars in CBDC flows by 2027, would be a turning point in the reserve structure. It marks the moment when diversification ceases to be a theory and becomes a policy.
Stablecoin market share and emerging market risks
Stablecoins remain a liquidity extension of the dollar. Approximately 99% of the circulation is pegged to the US dollar, with USDT and USDC predominating. Non-dollar or commodity-backed tokens can cause block-based competition, a clear sign that liquidity can become fragmented along political lines.
“Stablecoins pegged to the US dollar, such as USDT and USDC, account for over 99% of the $300 billion market as of October 2025. If the share of RMB-backed stablecoins reaches 10-15%, tensions in the bloc could increase. Disputes will only occur if it exceeds 20%, fragmenting global liquidity.”
Garcia-Herrero argues that rival stablecoins would need to capture more than 20% of global payments to trigger a true block split. This points to the point at which digital currencies are rewriting not only payments but also geopolitics.
On-chain payments now exceed $35 trillion annually, which is twice the amount processed by Visa. Stablecore CEO Alex Treece calls it a “modern Eurodollar network” that goes beyond banks to serve global demand for the dollar. This shows that digital rails are still enhancing the dollar’s reach.
According to IMF data, these tokens already process around 8% of GDP-sized flows in Latin America and Africa. This proves that stablecoins currently function as informal policy instruments.
“Stablecoins meet existing dollar demand. It is market-driven rather than state-driven. In the short term it strengthens dominance. In the long term it depends on US policy and confidence.”
Treece compares this digital dollar system to the Eurodollar market of the 1960s, when offshore investors tapped into U.S. liquidity through a parallel network. Rather than replacing the dollar, private innovation has expanded its reach.
Stablecoins in a high inflation economy
In inflation-hit economies like Argentina and Turkey, stablecoins act as unofficial dollar rails. These serve as a digital hedge against currency collapse, providing a parallel financial lifeline that illustrates the real-world role of cryptocurrencies.
“In Argentina, stablecoins protect 5 million users and account for more than 60% of cryptocurrency transactions. 20-25% of retail payments or 15% of exchange trading volumes are destabilizing. Similar implementations in Turkey rank among the top globally. Overall, the stabilizing role of stablecoins outweighs the risks at current levels.”
Her rule of thumb is that it is stable when used in moderation. However, once stablecoins exceed a quarter of the payment amount, monetary sovereignty is threatened and there is a point where relief becomes risk.
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Tokenization and sovereign debt
Tokenization has become an important topic in the financial sector, but the adoption of sovereigns has been slow. BIS pilots are progressing slowly, but private companies are progressing faster. Franklin Templeton expects early adoption in government bonds and ETFs in Hong Kong, Japan and Singapore. These pilots demonstrate where regulation and innovation already intersect.
“Financial institutions are looking for ways to manage volatility and increase liquidity. It starts with retail, but continues with institutional flow as secondary markets mature.” — Max Gokman, Franklin Templeton
According to CoinGecko data, there is over $5.5 billion in tokenized government bonds and over $220 billion in stablecoins. The concept is moving from pilot to practice as traditional assets are silently migrated on-chain.
“While predictions of trillions of dollars in RWA tokenization by 2030 seem ambitious, tokenized bonds have already reached $8 billion by mid-2025. We expect 5% of new sovereign issuance by 2028 to be led by Asia and Europe, and the US dollar’s resilience will continue.”
Her prediction (5% of sovereign issuance will be tokenized by 2028) suggests gradual reforms led by Asia and Europe. It complements rather than replaces the dollar system. Digital finance often evolves through compliance rather than rebellion.
Public and private initiatives are merging. Garcia Herrero is hoping for regulator-driven adoption, while Franklin Templeton is betting on market traction. In any case, traditional assets are moving onto blockchain rails, one bond and one fund at a time.
China’s electronic yuan and state-controlled cryptocurrencies
China’s e-CNY continues to expand under strict central control. By mid-2025, the company had processed 7 trillion yuan of transactions. This shows Beijing’s ability to digitize money without using private cryptocurrencies and how quickly a centralized ecosystem can scale.
Study Times, the official newspaper of the Central Party School, positions virtual currencies and CBDC as tools for “financial mobilization.” Beijing’s digital yuan and blockchain network will serve as strategic assets for liquidity management and sanctions resilience, a “digital logistics front” that combines finance and security.
“China’s e-CNY is the epitome of disciplined digital finance, having processed RMB7 trillion by June 2025. Once private blockchain FDI falls below 10% of fintech inflows, a fully state-led model will emerge. By late 2026, we will see a clear advantage.”
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She defines state-led dominance as private blockchain investments that account for less than 10% of fintech inflows. That level could be reached by late 2026, when digital sovereignty becomes measurable rather than rhetorical.
Russia-China trade and the “state-led Web3 block”
Russia and China, facing sanctions, now settle most of their trade outside the dollar system. Their digital asset experiments raise the question of when adjustments will become formal blocks, a tipping point that could reshape settlement geographies.
“Russia’s legalization of cryptocurrencies in foreign trade in 2025, with non-USD/EUR flows currently exceeding 90% in RMB and ruble, shows how a ‘state-sponsored Web3 block’ could emerge if 50% of trade moves to digital assets. A CBDC bridge could reduce risk, and ironically, a stablecoin pegged to the USD could stabilize such flows.”
Her 50% benchmark defines a new clear area threshold. Sanctions will stabilize trade, but global divisions may deepen.
Europe is already reacting. The EU’s recent ban on the ruble-backed stablecoin A7A5 is the first direct sanctions against a virtual currency. This showed how digital assets can be both weapons and targets in financial conflicts.
Identity verification and financial inclusion
Identity verification systems like Worldcoin’s biometric model are reshaping the conversation around identity and inclusion. Although its economic value is yet to be proven, scalability may determine how quickly trust frameworks evolve in the AI era.
“An identity verification test like WorldCoin could verify the identities of 200 million people by mid-2025, reducing borrowing costs by 50-100 basis points or increasing access to capital by 20-30%. If achieved by 2027, it would prove PoP beyond the hype.”
This debate reflects the broader digital identity race. TFH’s Adrian Ludwig believes that Proof-of-Human systems are the trust layer of the AI era. Garcia Herrero says only measurable impact will prove its value.
The cross-border trade advantages of AI and cryptocurrencies
AI-powered finance is now shaping liquidity, compliance, and payments. BIS says machine learning co-pilots are already automating AML reviews. Project Pine smart contracts allow central banks to adjust collateral in real time, demonstrating the rise of programmable compliance.
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BIS frames this as the core of programmable yet regulated finance. Speculative prospects like AI 2027 envision AI systems guiding liquidity, research and development, markets, and security policy. BIS requires completeness by design before such a system fully emerges.
“AI’s cross-border advantage will soar, with 75% of payments being instant by 2027. China appears poised to capture more than 30% share through state-backed sandboxes and nearly $100 billion in investments. Stablecoins could complement AI agents and dampen volatility.”
Nearly $100 billion in investments by 2027 supports this model. Stablecoins have the potential to serve as a compliant, tokenized layer that connects automated liquidity to programmable currencies, making them the next battleground for regulators.
Sovereign Bitcoin Reserves and Resource Bottlenecks
Although Bitcoin’s share of government reserves remains small, it has become symbolic. Links to risk assets and dependence on energy and chips could create new geopolitical challenges. Digital reserves could soon be tied into physical supply chains.
“Sovereign Bitcoin reserves remain less than 1% of total exchange. Reaching 5% by 2030 would spark a volatile ‘digital gold race.’” While energy and semiconductor supplies may be a challenge, stablecoins offer a more stable reserve alternative. ”
Meanwhile, digital asset treasury (DAT) companies manage more than $100 billion of cryptocurrencies, revealing how weak balance sheets reflect sovereign risk. Bitcoin-centric government bonds with tight liquidity buffers appear to be the most resilient. This foreshadows the challenges that countries may face as implementation progresses.
Benefits of Cryptocurrency Transparency and Governance
Public blockchains are being implemented in government registries and procurement systems. For democracies, transparent ledgers provide accountability that directly strengthens fiscal credibility.
“Blockchain procurement pilots will increase transparency in democracies like Estonia, and the government adoption market will soar from $22.5 billion in 2024 to nearly $800 billion by 2030. With 15-20% of national spending on-chain, democracies are gaining a structural advantage.”
Her 15-20% benchmark indicates the point at which blockchain adoption will become structured. This improves transparency scores and provides governance benefits for open societies.
conclusion
Across 10 areas, including CBDC, AI, stablecoins, tokenization, and blockchain, Garcia-Herrero’s framework suggests evolution rather than revolution. The dollar’s influence is spreading, not disappearing, as digital money transforms monetary power into a shared, data-driven system.
Her analysis bases her assumptions on measurable data such as reserve ratios, payment flows, and hiring criteria. The future financial order will depend less on disruption and more on governance – how transparency, trust and control are reconciled in the digital age.
