For decades, global order rested on a simple premise: U.S. economic and military supremacy structured the system, and others adjusted. From the Bretton Woods institutions to the post-Cold War unipolar moment, Washington stood at the center of both the global economy and its security architecture.
That model is now under strain. The United States continues to dominate the world’s financial plumbing: the dollar accounts for about 58 percent of official foreign-exchange reserves, roughly half of global trade invoicing, and more than 40 percent of cross-border debt issuance. The Federal Reserve remains the world’s de facto central bank, and dollar liquidity still sets the rhythm of global markets. Even governments that oppose U.S. policy – China, Russia, Iran – remain dependent on the dollar’s gravitational pull for trade and reserves.
Yet financial supremacy no longer translates into political alignment. The illusion that economic globalization and U.S. leadership were mutually reinforcing has faded. Globalization has not collapsed – it has simply diversified. What was once a single, U.S.-anchored system has become a network of overlapping regional and functional orders.
Across Asia, the logic of “multialignment” is taking root. China has built a parallel financial and connectivity infrastructure through the Belt and Road Initiative (BRI), the Asian Infrastructure Investment Bank, and regional digital platforms that challenge Western models. India, the Gulf states, and much of Southeast Asia are hedging – maintaining security ties with Washington while deepening trade, energy, and technology links with Beijing and Moscow. Even U.S. partners such as Japan and South Korea are exploring limited autonomy through regional financial cooperation and local-currency initiatives.
This pattern reflects a deeper shift: countries now view U.S. financial leverage as both indispensable and risky. Dependence on the dollar remains, but it has become a strategic calculation rather than an automatic choice. China’s Cross-Border Interbank Payment System (CIPS), India’s rupee-denominated trade arrangements, and BRICS proposals for alternative settlement mechanisms are not yet serious competitors to the dollar. But their political purpose is clear – to build options.
Washington’s use of the financial system as an instrument of statecraft has reinforced the dollar’s reach while revealing its vulnerability. The sweeping sanctions against Russia after the 2022 invasion of Ukraine demonstrated U.S. financial power, but they also exposed its limits. Many governments now recognize that access to the dollar can be withdrawn overnight. What once provided stability is increasingly seen as a potential liability.
This paradox defines the new era: the world still depends on the dollar but resists the hierarchy it implies. The United States can still constrain rivals through liquidity, regulation, and market access, but it can no longer assume those tools will generate political alignment. Even close partners are recalibrating – the EU’s pushback against U.S. industrial policy, the Gulf’s balancing act between Washington and Beijing, and ASEAN’s neutral diplomacy all point in the same direction.
For U.S. policymakers, the challenge is not imminent decline but strategic adaptation. Relying on financial centrality as a substitute for political leadership risks complacency. The United States’ enduring strengths – deep capital markets, the rule of law, innovation – still make the dollar indispensable. But the legitimacy of that dominance depends on how it is exercised. A system built primarily on coercive leverage cannot indefinitely sustain consent.
In the emerging Asia-centered global economy, stability will come less from hierarchy and more from managed interdependence. Washington remains best positioned to shape that framework, if it can lead through credible institutions and cooperation rather than compulsion. The next phase of globalization will likely be defined by financial gravity coexisting with strategic fragmentation. The dollar will remain the world’s currency, but not necessarily its consensus.
If the United States adapts to this reality, it can still serve as a stabilizing force in an increasingly plural world. If not, the system it built will continue to rely on its currency – but no longer on its leadership.
Image credit: Shutterstock ID 2652494647. This article was originally published in The Diplomat.
Elkhan Nuriyev
Dr. Elkhan Nuriyev is a senior fellow with the Alexander von Humboldt Foundation. He previously served as a Fulbright Scholar at The George Washington University and has held senior positions at leading think tanks and research institutions in the United States and Europe.