EuroFinance

According to the Bank for International Settlements (BIS) 2025 Triennial Survey, the dollar was on one side of 89% of all foreign-exchange transactions in April 2025.

For all the talk of de-dollarisation, the data tells a different story: as geopolitics fractured, global finance remained anchored to the dollar.

Mark Williams, Chief Asia Economist at Capital Economics, and Frederik Erixon, founder and director of the European Centre for International Political Economy (ECIPE), shared their perspectives on this shifting landscape during the 34th EuroFinance International Treasury Management in Budapest.

Drawing on years of research and policy experience, both experts explored how political fragmentation, trade tensions and financial interdependence are reshaping the global economy.

“People have been talking about the demise of the dollar for more than 20 years,” said Williams, “yet its share of global transactions is at a 25-year high. It is readily available, cheap and liquid — creating a network effect that is very difficult to escape.”

Erixon agreed. “When you looked at liquidity and depth, the dollar was still unrivalled,” he said. “Gold and silver were rising in reserve portfolios, but the dollar remained the world’s operating currency. If I had been a central banker outside the US, I would have been cautious about dependency — but for a corporate treasury, it was still the safest to hold.”

“The irony of today’s fractured world was that the dollar was becoming more dominant, not less.”
— Mark Williams, Capital Economics

Many blocs, one buck

The BIS survey showed the dollar’s share rising to 89%, while the renminbi’s share, though growing, remained under 9%.

As Williams explained, “We saw an increase in the use of the renminbi, particularly after the invasion of Ukraine. China’s share of its trade denominated in renminbi doubled to about 30%. Russia was using more renminbi given sanctions. But trade between China and places like Russia is a very small part of global transactions.”

He added: “The renminbi’s share of global FX is only around 9% — still pretty small.”

For treasurers, that meant the dollar remained the default working currency. “You use the currency that is most readily available,” said Williams. “That is the dollar — and because everyone uses it, it stays cheap and accessible. It is a self-reinforcing loop.”

Erixon cautioned, however, that financial reliance could become a strategic vulnerability. “In times of geopolitical stress, even the most liquid markets could fragment,” he said. “Treasurers should have been thinking not just about cost, but about continuity — what would happen if financial sanctions or controls spread more widely?”

Also read: EuroFinance Deep Dive: Resilience in liquidity planning

Tariffs, trade and the treasury challenge

“We are on a roller-coaster, aren’t we?” said Williams. “You could try to predict each twist — left, right, up or down — but frankly, who knows? What matters more is knowing where we’ll end up.”

For him, the direction was unmistakable: towards deeper decoupling. “This bilateral relationship has been on this trajectory since Trump’s first term,” he said. “Joe Biden didn’t roll it back — he added more restrictions.”

Erixon agreed but stressed the cost. “It was going to be a long period of friction, but not a clean break,” he said. “Both sides would remain entangled through trade, capital and knowledge flows. The danger was that political confrontation destroyed the institutional trust on which global business relied.”

“In times of geopolitical stress, even the most liquid markets can fragment.”
— Frederik Erixon, ECIPE

Also read: EuroFinance Deep Dive: Tariffs

China’s short-term edge, long-term drag

In the near-term, China holds the stronger economic hand, said Williams. “China is the supplier to the world, and the US the source of demand. It is easier to replace demand than supply.”

“When China slowed shipments of critical components in April and May, US carmakers said they’d have to stop production,” he recalled.

Over time, however, the advantage will shift. “China benefits far more from an integrated world than the US does,” Williams argued. “Xi Jinping’s dual-circulation strategy aims to keep the world dependent on Chinese supply chains, but this tension with the US is actually speeding up decoupling — and that weakens China’s long-term position.”

Erixon added: “China’s success had always rested on global openness — access to markets, technology and ideas. The more it turned inward, the more it risked eroding the very base of its industrial strength.”

Also read: EuroFinance tariff poll: Tariffs are back—but treasury isn’t blinking (yet)

A calculated confrontation

Williams believed Beijing’s defiance was deliberate. “China had been preparing for a possible Trump second presidency for four years,” he said. “Its export-control framework was formalised last year.”

From Xi Jinping’s perspective, this was ideological. “From the early weeks of his leadership there was talk about hostile foreign forces trying to keep China down,” Williams explained. “Xi didn’t believe in a long-term truce — he saw the US-China relationship as in structural conflict.”

“For the next few decades, markets and economies will be defined by this division into two blocs.”
— Mark Williams, Capital Economics

Erixon warned that ideological framing made compromise harder. “Once rivalries became moralised, economic rationality took a back seat,” he said. “That was when corporate planning became truly difficult.”

The cost of divorce

Erixon described the decoupling as slow, painful and expensive. “Both sides were so dependent on each other that accelerating the divorce would have been extremely costly,” he said.

He pointed to the human-capital links. “There were 300,000 Chinese students at American universities and about 12,000 Chinese researchers in US labs. If China thought it could replace that innovation capacity domestically, it was wrong.”

China’s industrial base, he added, “depended on being part of a global generation of ideas, innovation and technology.”

Navigating between two blocs

For corporates caught between Washington and Beijing, flexibility was the ultimate hedge. “If you wanted to have economic power you could use politically, you were in a good position,” said Erixon. “If you didn’t, you needed to develop it — figure out what strategic assets you could leverage.”

He stressed adaptability as the defining trait of the next decade. “The companies that could relocate production, reprice risk and reconfigure supply chains fast would define the winners and losers of this new era.”

He also foresaw “ambiguous, flexible boundaries” where regulations shifted constantly. “They might change month by month, year by year,” he said. “The biggest risk was for companies that couldn’t adapt quickly. You needed agility across production, logistics and financing.”

Resilience amid fragmentation

Despite the rhetoric of decoupling, the world remained tied together — by trade, technology and finance. As Williams put it: “The world might have been dividing politically, but financially it is still one system — and that system runs on the dollar.”

Erixon added. “We were entering a world of tension and uncertainty, but not one where you could simply pick sides,” he said. “For treasurers, that meant staying globally flexible — and strategically neutral.”

For corporate treasuries, that neutrality might have been the most valuable hedge of all.

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