From King to Pawn? The Future of the Dollar and the New World Order
For almost a century, the US dollar has dominated the global financial system. As the preferred currency for international trade, central bank reserves, and commodities such as oil, it has enjoyed a position that few other currencies in human history have ever achieved. However, a subtle yet, profound shift is taking place, one that has the potential to revolutionise the way the world views money, commerce, and trust. As geopolitical schisms deepen and technology transforms the way we trade currency, an increasing number of people are asking once-taboo questions: what if the dollar does not reign indefinitely? Is it possible, and if so what are the consequences for geopolitical stability and global power?
At the core of this possible revolution is gold, an ancient symbol of value and security that is currently undergoing a resurgence. Its golden shadow is closely followed by digital currencies, particularly those backed by real assets. The entire structure of global banking may be entering a new phase, in which power is shared — or disputed — through decentralised technology and multipolar alliances rather than being centralised in Washington.
While the dollar remains the leading currency, recent US actions, particularly under President Trump, show a more forceful, sovereignty-focused approach to global commerce. Tariffs and reconfiguration of alliances were more than simply upheaval; they signalled a transition towards a transactional society. This has not prompted nations to quit the dollar, but it has spurred them to investigate alternatives, diversify reserves, and reconsider financial dependency – not out of panic, but out of strategy.
China is arguably the most strategic player in this new monetary environment. For more than a decade, Beijing has been discreetly moving its holdings from US Treasuries to gold. In February 2025 alone, the People's Bank of China added five tonnes of gold, raising the total to over 2,285 tonnes. This accumulation is not an isolated incident, but rather part of a persistent long-term plan to lessen reliance on the dollar, protect the Chinese economy from financial penalties, and boost the yuan's worldwide attractiveness. By backing up its reserves with tangible assets, China signals that it is prepared for a future in which the financial centre of gravity moves eastward.
The symbolic importance of gold in this setting cannot be overstated. Its latest price increase, set to break all-time highs in early 2025, is not just due to inflation or investor fear. It symbolises a global reevaluation of what constitutes "safe". Gold has no counterparty risk. It cannot be frozen by penalties or boosted by central banks. Thus, its surge in value could indicate a vote of no confidence in fiat currencies, particularly the dollar's capacity to remain unchallenged indefinitely.
This movement is most closely coordinated within the BRICS bloc, which includes Brazil, Russia, India, China, and South Africa. These countries currently hold more than 20% of the world's official gold reserves, and conversations about creating a BRICS gold-backed digital currency are becoming more serious everyday. This proposed currency would be largely used for cross-border commerce, eliminating reliance on the dollar while avoiding Western-controlled banking networks such as SWIFT.
Such a currency might have substantial advantages. If even a small amount of intra-BRICS trade were resolved in this alternative unit, it might lower transaction costs, help minimise currency volatility, and build the framework for a rival global settlement system. When paired with distributed ledger technology, it has the potential to improve transparency, security, and operational efficiency, in stark contrast to the more opaque procedures of the existing dollar-based system.
This inevitably raises the question of whether a gold-backed digital currency is merely a modern rebranding of the traditional gold standard, which the international community has already moved beyond. There are some parallels, but there are also significant and crucial distinctions. The classical gold standard anchored national currencies to a fixed amount of gold, limiting governments' ability to grow the money supply or respond effectively to economic downturns. During the Great Depression, for example, this inflexibility contributed to prolonged recessions and slow recovery. Monetary policy was essentially subservient to gold reserves.
In contrast, modern gold-backed digital currencies serve as hybrid instruments. They are not meant to replace national fiat systems, but rather to complement them, serving primarily as an alternative medium for cross-border commerce and reserve diversification. These digital units are often produced on blockchain systems and are backed by actual gold stored in safe, auditable reserves, providing verifiability and confidence. Crucially, they do not impose a fixed peg that restricts a country's overall monetary policy, allowing for greater flexibility than the historical gold standard.
Despite their potential, gold-backed digital currencies have obstacles. Governance remains a fundamental question: whose organisations would govern such a system, ensure reserve integrity, and preserve user confidence across borders? Political tensions within coalitions such as BRICS — particularly between China and India — might impede agreement. Furthermore, while digital currencies might increase transparency, the real gold underlying them is still subject to safe storage, honest audits, and coordinated legal frameworks. There is also the question of adoption: global commerce is still primarily priced in dollars, and altering that would require not only political will but also extensive integration into global supply chains, markets, and corporate infrastructure.
While central banks in Asia, the Middle East, and South America continue to build their gold holdings, the United States, while retaining the world's largest official holder with 8,133.5 metric tonnes, has not added to its stock in decades. What was once an indicator of lasting financial power may now be seen as strategic inertia. Other countries, on the other hand, are not only acquiring gold but also experimenting with novel methods such as tokenised gold systems, which are digital tokens issued on blockchain platforms and completely backed by actual gold stored in secure reserves. These events indicate that the dollar's unparalleled standing as the primary reserve asset may progressively erode. This is not a sudden departure from the dollar, but rather a gradual expansion of the global monetary toolset.
It is doubtful that this change will result in a single substitute for the dollar. More likely, the future decades will usher in a more multipolar currency world, in which digital euros, tokenised yuan, gold-backed trade tokens, and stablecoins coexist. In this scenario, the dollar is not dethroned, but rather decentralised — no longer the lone foundation, but one of numerous anchors in a more equitable global economy.
The increase in gold, experiments with blockchain-based monetary systems, and the general trend towards diversification all point to a new age in international banking. As history has proven, the dominant currency of every age is more than just economics; it reflects trust, geopolitical order, and technical advancement. Currently, all three are in flux.
When the global financial landscape undergoes a quiet rebalancing of trust, and governments carefully adjust their reserves and examine the design of monetary systems, one could imagine gold looking into the mirror of history and asking:
“Mirror, mirror on the wall, who is the fairest currency of all?”
For the first time in decades, the mirror may not say “the dollar”.
Image generated using ChatGPT from the prompt ‘Generate an image of a US dollar fading’.
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the wider St. Andrews Foreign Affairs Review team.
