This Is How the Future of the Dollar Will Be Decided

Opinion|This Is How the Future of the Dollar Will Be Decided

In the three months since President Trump’s “Liberation Day” tariffs, and the days since his first wave of post-Independence Day trade letters, a question has been bouncing around the world’s financial capitals: Is the dollar still healthy?

The answer is no, but the reason has little to do with the tariffs.

What the debate about America’s currency misses is that the dollar is being actively undermined — and has been for the better part of a decade. Instead of watching the slow-moving traditional macroeconomic indicators of dollar strength, like how many dollars other central banks hold and how often the currency is used in global trade, we need to start paying more attention to the rapidly changing way countries are working around the dollar through new payment systems.

Payment systems are the technical back-end processes of how financial institutions send money to one other. It’s a complex global network that places the United States — and our banks — at the nexus of nearly 90 percent of currency exchanges. Even when two countries aren’t trading in dollars, the way the system’s pipes are built makes the dollar a must-have go-between.

This sprawling financial plumbing has given American policymakers enormous power to leverage — and yes, sometimes weaponize — the dollar to pursue foreign policy goals. From Venezuela to Iran to North Korea, limiting access to the dollar has been at the heart of U.S. security strategy for decades.

But the systems we helped create to ensure the dollar’s supremacy are showing their age. A case in point is the Society for Worldwide Interbank Financial Telecommunications, commonly known as SWIFT, which turned 50 two years ago. U.S. policymakers have increasingly leaned on SWIFT to isolate the rogue actor of the moment, be it a terrorist group or Vladimir Putin.

SWIFT works as a messaging system where banks communicate with one another before they send the actual money on a different network, like texting a friend on WhatsApp and then sending that same friend the money you promised on Venmo. New technology is making this old way of doing business obsolete. Introduced in 2015, China’s Cross-Border Interbank Payment System combines messaging and money transfers on one platform. Transaction volumes on the Chinese payment system surged last year, with banks joining from all over the world.