Even two of the world’s most heavily sanctioned countries, Russia and Iran, have not abandoned the dollar by choice and remain unwilling to embrace the yuan as an alternative.
The latest round of “the dollar is dying” doomsday prophecies has been fueled by the war in Ukraine and the conflict with Iran. The arguments typically run as follows: Russia and Iran have abandoned the dollar in favor of the Chinese yuan; the yuan is gold-backed, giving it intrinsic value the dollar lacks; the ruble is recovering and performing well; U.S. debt and inflation have fatally undermined confidence in the dollar; and a sweeping global shift away from the dollar and the SWIFT payment system is already underway.
Each of these claims is either false, grossly overstated, or presented without the context necessary to understand the data being cited.
The foundation of the dollar-is-dying argument rests on Russia and Iran’s use of the yuan for trade settlements. What this framing omits is that neither country chose the yuan.
Both were locked out of the dollar system by sanctions and had no alternative. Russia never agreed to 100 percent yuan trade with China.
Bilateral settlements were split between rubles and yuan, with no exclusive yuan arrangement ever announced or implemented.
The deeper reality is that Russia never abandoned its preference for dollars. Putin imposed strict capital controls requiring 43 major exporting firms to deposit no less than 80 percent of their foreign currency earnings with Russian banks and sell at least 90 percent of those proceeds on the domestic market within two weeks.
Additional measures banned individuals from purchasing foreign currency cash, limited withdrawals, and restricted transfers abroad. All of these policies were intended to increase the US dollar reserves in the central bank.
Russia has since stated openly that it wants sanctions lifted so it can return to dollar-based transactions, an implicit admission that the yuan arrangement failed.
Prior to the U.S.-Israeli military campaign that began February 28, 2026, Iran was exporting approximately 1.4 to 1.6 million barrels of oil per day, almost entirely to China, with payments handled in yuan not by preference but because sanctions blocked dollar transactions entirely. The arrangement served China’s interest in internationalizing the renminbi far more than it served Iran.
Iran’s much-publicized yuan toll demand for Strait of Hormuz transit has effectively failed, with only two documented vessels making such payments, and that requirement itself reflects the same sanctions-driven logic. Iran cannot move dollars through SWIFT and must rely on China’s CIPS network.
Following the ceasefire and a U.S. naval blockade imposed April 13, Iran’s seaborne petroleum exports collapsed to just three percent of the February baseline by May, with crude exports reaching absolute zero and export revenues falling below $200 million, according to FDD analysis. Iran is not receiving meaningful export income in any currency, rendering any discussion of its currency preferences academic.
Reports of the ruble’s alleged recovery are similarly misleading. The official exchange rate, roughly 73 to 74 rubles per dollar, is sustained almost entirely through state intervention. These measures include mandatory foreign-currency conversion requirements on Russian exporters, capital controls that prevent ruble outflows, restrictions on foreign withdrawals and transfers, and domestic interest rates held between 15 and 21 percent to support the currency.
Even with these stringent government controls, the exchange rate is largely theoretical. Since June 2024, dollar and euro trading has been halted on the Moscow Exchange, and sanctions have driven a 96 percent collapse in ruble-denominated foreign exchange volumes.
No major bank, airport kiosk, or currency exchange anywhere in the world routinely accepts or trades rubles. Even Russia’s BRICS partners are unwilling to settle trade in rubles.
A currency that cannot be freely exchanged anywhere outside its own borders has no meaningful international value, regardless of what any official rate claims.
Another odd claim that resurfaces every few months is that the yuan, or the offshore yuan, is gold-backed. Neither claim is true. The yuan is a fiat currency. China has never announced, implemented, or credibly proposed a gold-backed yuan.
There is no convertibility mechanism linking the yuan to gold at any fixed rate. While this claim is common in de-dollarization commentary, there is no supporting documentation from any official Chinese source.
The petroyuan futures contract launched in 2018 is settled in yuan, not gold, and has failed to displace the dollar in oil markets. Seven years after launch, according to SWIFT’s own RMB Tracker, the yuan accounted for just 2.73 percent of global SWIFT payments in December 2025, ranking sixth among world currencies, compared to 48 percent for the dollar and 24 percent for the euro. The yuan’s share of global foreign exchange reserves stood at 1.93 percent as of the third quarter of 2025, per IMF COFER data.
Saudi Arabia, whose participation would be decisive for any genuine petroyuan challenge, has made no confirmed commitment to invoice oil in yuan, with Riyadh continuing to price the bulk of its crude in dollars.
Russia’s top economic negotiator Kirill Dmitriev stated in February 2026 that the U.S. will eventually lift sanctions, and an internal Kremlin memo explicitly sought restoration of dollar settlement for Russian energy transactions on the grounds that dollar integration would stabilize Russia’s balance of payments and its foreign exchange markets.
A country enthusiastically embracing de-dollarization does not draft memos requesting a return to the dollar.
Beyond the Russia and Iran cases, the broader de-dollarization thesis fails on structural grounds. The euro was the most credible challenger the dollar has ever faced.
It was backed by a large unified economy, deep capital markets, stable institutions, and widespread adoption. Even so, it peaked at roughly 28 percent of global reserves and has been declining ever since.
Moreover, that peak did not represent true global internationalization. Much of the euro’s growth came from its adoption within the eurozone itself. The currency still plays only a limited role in trade with North America, South America, Asia, and much of Africa.
If the most structurally sound alternative could not displace the dollar, the yuan faces a far steeper climb. The yuan is not freely convertible.
Any currency seeking reserve status must be freely tradable, meaning foreign holders can move it in and out without restriction. China maintains strict capital controls. No country accumulates reserves in a currency it cannot freely liquidate. This single structural fact disqualifies the yuan as a near-term dollar replacement regardless of bilateral trade volumes.
There is also no viable alternative payment infrastructure. SWIFT processes roughly 40 million messages daily. China’s alternative, CIPS, handles a fraction of that volume and lacks the legal framework, correspondent banking relationships, and liquidity depth that SWIFT has built over decades.
Russia’s SPFS system is essentially domestic. U.S. Treasury markets remain the only bond market deep enough to absorb sovereign-scale transactions without moving prices, which is why countries hold dollar reserves in the first place. Reserves must be deployable at scale and on short notice. No alternative market currently offers that.
BRICS summits have produced years of de-dollarization rhetoric and no concrete mechanism. The 2023 Johannesburg summit, widely reported as a milestone, produced no binding currency agreements.
No BRICS common currency exists. No gold-backed BRICS monetary instrument has been issued. Nor have BRICS members shown any willingness to adopt a yuan-based trade and financial system that would effectively place China at the center of their economies.
Finally, even where non-dollar trade settlements occur, the dollar remains the unit of account. When Russia sells oil to India in rupees, or China pays for Iranian crude in yuan, the reference price for that oil is still denominated in dollars.
The dollar’s role as the global pricing standard persists even when it is not the direct medium of exchange. Commodity markets, oil, gold, and grain are priced in dollars globally. That pricing function is the deepest form of dollar dominance, and it has not meaningfully eroded.
What de-dollarization advocates most frequently cite as proof of the dollar’s imminent decline is U.S. national debt.
The argument sounds intuitive: America owes more than its entire annual GDP, interest payments are consuming an ever-larger share of federal revenue, and eventually the world will lose confidence and switch to something else.
What this argument fundamentally misunderstands is the role U.S. Treasury debt actually plays in the global financial system.
U.S. government debt is not a vulnerability undermining the dollar. It is the mechanism through which dollar dominance operates. Since the end of the Bretton Woods gold standard in 1971, U.S. Treasury debt has functioned as the world’s reserve asset, replacing gold as the instrument against which every major currency is ultimately measured and held. Every central bank that accumulates reserves accumulates Treasuries.
Every sovereign wealth fund seeking a safe store of value buys Treasuries. China, despite years of de-dollarization rhetoric, holds approximately $750 billion in U.S. Treasuries. Japan holds over $1 trillion.
The very debt that now exceeds U.S. GDP, and which critics cite as proof of dollar weakness, is the asset the entire world depends on for financial stability.
Every country carries debt and every major currency experiences inflation. These are not uniquely American conditions. What is uniquely American is the combination of liquidity, convertibility, legal infrastructure, Treasury market depth, and universal acceptance that no other currency or sovereign debt market currently rivals.
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