The global monetary landscape is undergoing a period of considerable uncertainty. Concerns over the “debasement trade”, the fear that fiat currencies, particularly the US dollar, are losing credibility, have driven investors toward perceived safe havens like gold and bitcoin which have seen record highs. At the same time, the dollar itself has experienced a sharp decline in value, prompting questions about its long-term role in the global financial system. Yet there are signs that Washington is not prepared to cede ground to rival powers, especially China.

Are we seeing the return of the dollar? Or perhaps it never really went away.

Pressure from Washington

White House officials are seriously exploring strategies to encourage other countries to adopt the US dollar, the Financial Times reports.

This move signals growing concern over the potential erosion of US financial influence and reflects heightened awareness of China’s efforts to expand the global use of its own currency in trade.

There is growing evidence that the current US administration is willing to take bold steps to support strategic allies, as demonstrated by the extension of a dollar swap line to Argentina. While some observers interpreted this as a politically motivated gesture aimed at bolstering a government aligned with former President Trump, the move can also be understood through the lens of geopolitical calculation and broader political-economic strategy, reflecting Washington’s readiness to use financial tools not only to stabilise partners but also to counterbalance shifting global monetary dynamics.

The role of stablecoins

One of the forces shaping the future of the US dollar is the rise of stablecoins. The White House has also gone all-in on stablecoin adoption, with the landmark GENIUS Act looking set to bring stablecoins into the mainstream.

It’s hard to predict precisely how widespread stablecoin adoption would affect the dollar, but analysts believe stablecoins could drive inflows of capital into the US dollar. According to a JPMorgan note,  “stablecoin adoption has the potential to reinforce the dollar’s role in global finance.” The majority of stablecoins are pegged to the US dollar and backed by US assets.

For America’s economic rivals and allies, the dollar-denominated stablecoins pose their own potential risks. For instance, both the  former governor of the People’s Bank of China and the current president of the European Central Bank have expressed concern about the consequences of increased global dollarisation and the potential threat to conventional monetary policy.

Leading from the front?

Any consideration of the continuing health and primacy of the US currency needs also to square the fact that President Trump has consistently called for a weaker dollar to promote US competitiveness.

While the White House is seeking to underline the pre-eminence of USD as global reserve currency, senior administration officials, including the Treasury Secretary, are actively working to prevent a dollar rally.

Ultimately, the future of the dollar may depend on the strategic choices made in Washington, and, critically, the willingness of partners and adversaries to follow its lead.

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