Dr. Hamad Kasasbeh

Financial sanctions may appear to be one of the clearest expressions of the dollar’s power. Yet they contain a deeper paradox: the more the United States is able to use the centrality of its currency and financial system as a tool of pressure, the greater the value to others of having options that reduce their exposure to that leverage. The real question, therefore, is not whether the dollar is about to lose its position—the evidence does not suggest that—but whether repeated use of this dominance is gradually encouraging countries to build pathways that make dependence on it less necessary. In that sense, the dollar’s strength itself may become one of the forces reshaping the global financial system.

This process can be understood in three stages: isolation, adaptation, and institutionalization. When a country is cut off from banks, capital markets, and conventional settlement channels, it begins to seek intermediaries, local-currency arrangements, barter, and alternative routes for shipping and payments. From this emerges what may be called a “geopolitical shadow economy”: a parallel network of trade, finance, shipping, and settlement. It is not a shadow economy in the traditional sense, but a structure designed to reduce reliance on channels that sanctions can disrupt. With time, temporary workarounds can evolve into more regular networks and, eventually, into infrastructure that others can use as well.

China’s Cross-Border Interbank Payment System, CIPS, offers one example of this shift. It is not a complete substitute for SWIFT, nor does using it automatically mean moving away from the dollar. But its scale is no longer marginal: in the first eight months of 2026, it processed about RMB 139.7 trillion in payments. The significance of that figure is not that China has replaced the Western financial architecture, but that cross-border transactions through other channels are becoming increasingly viable. In finance, an alternative does not need to displace the dominant system to matter; it only needs to provide a workable option for transactions that countries and companies want to shield from political risk.

Iran demonstrates both the usefulness and the limits of these alternatives. It has managed to preserve a significant share of its oil exports, particularly to China, through complex shipping and settlement networks. At one point in 2026, flows reached roughly 1.58 million barrels per day before falling sharply in August as U.S. pressure intensified and restrictions on shipping tightened. The lesson is clear: alternative channels may prevent a complete shutdown, but they do not eliminate the cost of sanctions. Trade becomes more expensive and fragile, while access to financing, technology, and investment becomes more difficult. The ability to endure is not the same as the ability to prosper.

The issue becomes more consequential when such tools spread from sanctioned states to economies that are not financially isolated. This is where BRICS initiatives to expand the use of local currencies and improve links among payment and settlement systems matter more than recurring discussion of a single common currency to rival the dollar. The shift may not come from one monetary challenger, but from the accumulation of arrangements that make the dollar an option in a growing number of transactions rather than an unavoidable condition. Dominance, in other words, may erode not through a sudden break, but through a gradual expansion in the ability of countries to trade and finance themselves through more than one center and one network.

The same logic is beginning to appear in reserve management. In September 2026, the Dutch central bank redistributed part of its gold reserves, redirecting around 86 tonnes of holdings previously located in the United States and Canada toward London. New York’s share of Dutch gold reserves fell from 31.3% to 18.5%. The bank did not portray the move as a loss of confidence in the United States; it linked the decision to geopolitical uncertainty, crisis preparedness, and risk diversification. The more important implication is that reserve management is no longer only about what asset is held, but also where it is held, how easily it can be accessed, and whether it remains usable if one financial center is disrupted. This is less a story of withdrawal from America than of a broader approach to security based on reducing concentration risk.

None of this means the world is approaching the end of the dollar. The dollar accounted for about 57.13% of global foreign-exchange reserves in the first quarter of 2026 and remained at the center of international finance, payments, and debt markets. Its strength also rests on more than political influence: deep and liquid capital markets, a vast supply of safe assets, and financial networks that would be difficult to replicate quickly. The real competition, therefore, is not simply over which currency might come after the dollar, but over who can offer an integrated ecosystem of liquidity, trust, markets, and safe assets.

The same applies to the “petrodollar.” Greater settlement of energy trade in renminbi or local currencies is important, but it does not dismantle the foundations of the dollar’s position. Oil helped reinforce dollar use historically, yet U.S. capital markets and global financing networks now play an even larger role in sustaining it. The indicator worth watching, then, is not the number of declarations about “de-dollarization,” but the amount of trade, debt, payments, and reserves that can be managed efficiently through other channels. The next phase of competition may not produce a new dominant currency so much as a system that is less dependent on a single center.

In sum, the sanctions paradox is not that the United States uses the dollar today and loses its position tomorrow; that would be an oversimplification unsupported by the evidence. The paradox is that the effectiveness of sanctions increases the value of alternatives and encourages investment in them. If the channels created under pressure become cheaper, more reliable, and eventually move from defensive use into ordinary trade and finance among countries and companies that are not under sanctions, then the real transformation begins. The dollar may remain at the top for many years, but dominance is not only about being the leading currency; it is also about remaining the route others most need to pass through. What deserves attention is the emergence of a more plural financial system in which the dollar remains first, but with less ability to monopolize the road.