A Popular Summary of the Core Content
The topic of “de-dollarization” has been a hot topic on the internet for several years. However, people have only seen half of the story: governments around the world have indeed been trying to reduce their reliance on US dollar reserves, the SWIFT system, selling US Treasury bonds to buy gold, promoting domestic currency settlements, and establishing alternative payment networks. But what few people realize is that the US dollar has no intention of fading away. Instead, it has undergone a digital transformation through its new “stablecoins.” The traditional dollar, which could only be used through bank accounts, has evolved into a “digital dollar” that can be transferred over the internet and easily held by ordinary people. This has allowed the dollar to penetrate into small-scale cross-border transactions that it previously couldn’t reach. In essence, the dollar’s dominance is just reappearing in a new form. If we want to internationalize the Chinese yuan, we can’t just focus on traditional areas like large-scale foreign trade settlements; we need to quickly address the shortcomings in digital payment systems. Otherwise, a large portion of everyday transactions will be handled by the new digital dollar, potentially rendering our previous efforts ineffective.
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A Detailed Explanation of Each Point
1. The “de-dollarization” you thought you understood was actually just half the story
The news about “de-dollarization” in the past few years has followed a similar narrative: Russia was excluded from the SWIFT system, central banks have been selling US Treasury bonds to buy gold for over a decade, BRICS countries have been promoting domestic currency settlements, and the proportion of yuan used in cross-border settlements has been increasing. These are all real examples of “de-dollarization at the official level.” The US often uses the dollar system as a tool for sanctions, prompting governments to diversify their reserves and avoid putting all their eggs in one basket. However, this article highlights a hidden aspect that most people have overlooked: the digital expansion of the dollar. Currently, 99% of all stablecoins in the world are pegged to the US dollar, with a total market value of over $320 billion. Every year, $1.5 trillion is exchanged across borders, and this figure is growing rapidly. While official reserves are gradually reducing their dollar content, ordinary small businesses, cross-border workers, and overseas vendors are increasingly using dollar-stablecoins for transactions. The dollar hasn’t disappeared; it has simply moved from visible bank transactions to less noticeable, high-frequency transactions. What you thought was the dollar’s decline was actually just a shift in its presence.
2. Stablecoins are not just tools for speculation; they’re a “superpower boost” for the US dollar
Many people think stablecoins are just used by crypto enthusiasts to circumvent regulations, failing to realize their strategic significance. Imagine how difficult it was for ordinary people to use the dollar before. For example, if you were a small business owner handling cross-border orders, you’d need to open a US dollar account and provide various documents, wait 3-5 days for the payment to arrive, and pay fees of several dozen to hundreds of dollars. With dollar-stablecoins, you can receive the payment in minutes using a digital wallet on your phone, with fees of less than $1—no need to open a bank account at all. This has lowered the barrier to using the dollar from only large companies and institutions to anyone with a phone and internet access. Moreover, companies that issue dollar-stablecoins use the funds to buy short-term US Treasury bonds (essentially, low-risk loans from the US government). Every additional dollar-stablecoin purchased globally contributes to the purchase of these bonds, expanding the dollar’s influence. This has even reached countries in Africa and Southeast Asia that don’t have many traditional bank accounts, replacing local currencies.
3. The future of currency competition is no longer about who has the most foreign reserves; it’s about who controls the most payment channels
For decades, international currency competition has been about which country’s currency has the highest share in central bank reserves and is most used in large-scale foreign trade. This relied on physical infrastructure like bank networks and the SWIFT system. But the game has changed. The new battlegrounds are in mobile apps for cross-border shopping, platforms for freelance work, AI-powered transaction services, and social media payment apps. For instance, if you receive a foreign advertising order through a cross-border video platform, you can be paid in dollar-stablecoins directly, without the need to exchange currency at a bank. Whoever controls these payment channels will have a stronger position in the digital age. Dollar-stablecoins have already taken a significant share in these areas, giving the US a head start in the new competition.
4. We can’t just focus on preventing the risks of stablecoins; we need to seize the digital opportunities for the yuan
Our previous approach to regulating stablecoins was to prevent speculation and unregulated capital flows, which is necessary. However, if we only focus on that, we might miss out on new competitive opportunities. While promoting the internationalization of the yuan, we’ve mainly focused on large-scale foreign trade and central bank exchanges. If we don’t quickly expand to areas like cross-border payments, e-commerce, and labor services, the yuan’s digital ecosystem could be overshadowed by the new digital dollar. In the digital age, the competition is about who can dominate the payment channels used by ordinary people. Dollar-stablecoins are already gaining traction in these areas, giving the US a significant advantage in the new landscape.
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In summary, the US dollar’s dominance is not fading; it’s adapting and expanding through digital channels. If we want to internationalize the yuan successfully, we must address the shortcomings in digital payment systems and seize the new digital opportunities. Otherwise, even if we increase the proportion of yuan used in official transactions, the widespread use of dollar-stablecoins will undermine the foundation of the yuan’s internationalization.