Is the US dollar hegemony facing its end in the digital age? Analyzing the top ten trends of CBDC and stablecoin reshaping the global monetary order.

The US dollar has dominated the global financial system for more than half a century, but the arrival of the digital age is triggering unprecedented structural changes. According to the latest data from the International Monetary Fund (IMF), the dollar's share of global forex reserves is set to fall to 56.32% by early 2025, marking the lowest level since the euro's inception. Meanwhile, 94% of Central Banks are testing Central Bank Digital Currencies (CBDC), and artificial intelligence (AI) technology is accelerating innovations in cross-border Settlement, while stablecoins have taken on a substantial dollarization role in emerging markets. This article, based on exclusive analysis by Dr. Alicia García-Herrero, Chief Economist for Asia Pacific at Natixis, discusses the top ten challenges facing the dollar's dominance and provides key threshold indicators for measuring this historic transition.

The Proportion of US Dollar Reserves Continues to Decline: The Key Threshold from Quantity Change to Quality Change

The IMF's COFER data on official forex reserve currency composition shows that the dollar's reserve share has steadily declined from 71% in 2000 to 56.32% in the second quarter of 2025. The shares of the euro and the renminbi are gradually increasing, while the participation of 94% of central banks in CBDC pilot projects indicates a deeper digitalization process of the monetary system.

Garcia-Ereño pointed out based on his IMF work experience: “If the dollar's reserve share falls below 55% before 2027, while the annual CBDC settlement amount exceeds 1 billion dollars, it will mark a measurable and substantive decline in the dominance of the dollar.” This threshold will become a key observation indicator for investors to assess the turning point of the international monetary system.

Stablecoin Market: Dollar Expansion and Potential Challenges

As of October 2025, in a stablecoin market worth $300 billion, USDT and USDC, which are pegged to the US dollar, dominate with an absolute share of 99%. These digital assets essentially constitute an extension of US dollar liquidity, creating a parallel financial network similar to the “Eurodollar market” of the 1960s.

Emerging Market Stablecoin Substituting Currency Phenomenon

In high inflation economies such as Argentina and Turkey, stablecoins have taken on a substantive dollarization function. Argentina has 5 million users using stablecoins as a means of value storage, accounting for over 60% of cryptocurrency trading volume. Garcia-Ereño proposed a key risk threshold: “When stablecoins account for more than 25% of retail payments or over 15% of forex trading volume, it will shift from a stabilizing factor to a threat to monetary sovereignty.”

Potential Geopolitical Fragmentation Scenarios

Garcia-Erelo's analysis suggests: “If the market share of RMB-backed stablecoins reaches 10-15%, it will trigger tensions among currency groups; exceeding 20% could lead to substantial fragmentation of global liquidity.” Currently, Russia's legislation in 2025 allows cryptocurrencies for foreign trade, with the proportion of non-USD/EUR settlements exceeding 90%, indicating the early emergence of a “state-led Web3 group.”

Tokenization Wave: The On-Chain Migration of Traditional Financial Assets

Tokenization of real-world assets (RWA) is moving from proof of concept to scaled application. According to CoinGecko, by mid-2025, the scale of tokenized government bonds will exceed $5.5 billion, tokenized bonds will reach $8 billion, and the total market capitalization of stablecoins will surpass $220 billion.

Franklin Templeton expects Hong Kong, Japan, and Singapore to be the first to break through in the field of national debt and ETF tokenization. Garcia-Ereiro predicts: “By 2028, 5% of new sovereign bond issuances will be tokenized, primarily led by Asia and Europe, but this will complement rather than replace the dollar system in the short term.”

China's Digital Renminbi: A State-led Paradigm of Digital Currency

As of June 2025, the total transaction volume of the Digital Renminbi (e-CNY) has reached 70 trillion RMB, demonstrating the rapid expansion capability of the state-led digital money model. The Central Party School publication “Study Times” positions cryptocurrencies and CBDCs as “financial mobilization tools,” highlighting their strategic significance.

Garcia-Ereño proposed the criteria for establishing a state-led model: “When foreign direct investment (FDI) in the private blockchain sector falls below 10% of the fintech inflow, a fully state-led digital money model will be formed. It is expected that by the end of 2026, we will see a clear establishment of this pattern.”

The Integration of Artificial Intelligence and Blockchain: Next-Generation Financial Infrastructure

The Bank for International Settlements (BIS) warns that autonomous trading and liquidity algorithms could amplify systemic risks, while also acknowledging that AI-driven financial infrastructure will significantly enhance efficiency. It is expected that by 2027, 75% of cross-border payments will achieve instant Settlement, and China is expected to capture over 30% market share through state-supported regulatory sandboxes and nearly 100 billion USD in investments.

Garcia-Ereño pointed out: “Stablecoins may become a complementary layer for AI agents, dampening volatility and connecting automated liquidity to programmable money - this will become the next battleground for regulation.”

Sovereign Bitcoin Reserves and the Geopolitics of Digital Assets

Bitcoin still accounts for less than 1% of sovereign reserves, but its symbolic significance is substantial. Garcia-Ereero believes that: “If this proportion reaches 5% by 2030, it will trigger a volatile 'digital gold rush'. The energy and semiconductor supply chains may become new geopolitical bottlenecks.”

At the same time, the professional Digital Asset Treasury (DAT) company manages over 100 billion USD in crypto assets, providing pioneering experience in national-level digital asset reserve management.

Advantages of Blockchain Transparency and Democratic Governance

Blockchain technology is entering government registration and procurement systems, providing financial transparency advantages for democratic governance. Garcia-Ereño stated: “If 15-20% of national expenditures are executed through on-chain systems, democratic governance will gain structural governance advantages.” The government blockchain adoption market is expected to surge from $22.5 billion in 2024 to nearly $800 billion by 2030.

Proof of Personality (PoP) System and the Revolution of Financial Inclusion

Worldcoin and other identity verification systems through biometric validation have accumulated 200 million identities. Such systems are expected to reduce borrowing costs by 50-100 basis points or enhance capital accessibility by 20-30%. Garcia-Ereero stated, “If these goals are achieved by 2027, it will validate the actual value of PoP beyond speculation.”

Russia-China Trade and “State-Led Web3 Group”

In the face of sanctions, Russia and China have shifted the vast majority of their trade to a non-dollar system. Garcia-Ereiro proposed a key threshold: “If 50% of trade shifts to digital assets, a clear 'state-led Web3 group' will be formed.” The recent ban by the EU on the ruble-backed stablecoin A7A5 marks that digital assets have become a weapon and target in financial conflicts.

Future Monetary Order: Evolution Rather Than Revolution

Garcia-Ereiro's analytical framework suggests that the dominance of the dollar is experiencing diffusion rather than disappearance. Digital money transforms monetary power into a shared, data-driven system, but this process is more evolutionary than revolutionary.

She emphasized: “The future monetary order will rely less on disruptive technology and more on governance mechanisms — namely how transparency, trust, and control are coordinated in the digital age.”

Conclusion

The dollar-dominated global financial system is undergoing the first round of structural tests in the digital age. From the rise of CBDCs to the substantial dollarization of stablecoins, from tokenized bonds to AI-driven cross-border settlements, transformation is quietly occurring at various levels. The specific thresholds provided by Garcia-Ehrler—dollar reserves falling below 55%, CBDC settlements exceeding $1 billion, and non-dollar stablecoin market share exceeding 20%—offer measurable benchmarks for observing this historic shift. For crypto investors and traditional financial institutions, understanding these trends is not only about investment strategies but is also key to grasping the reconstruction of the global financial landscape over the next decade.