US Treasury Secretary Janet Yellen recently stated that the greenback has no serious competitors in the world, but that claim might be “wishful thinking” on Washington’s part, geopolitical analyst Brian Berletic says.

He points out that despite its power, the White House’s actions recently prompted countries around the world to look for alternatives. And, in fact, alternatives already exist – in the form of the euro and the yuan above all, associate professor of international political economy and global studies at the Italian International Institute Lorenzo de’Medici, Fabio Massimo Parenti,indicates. He acknowledges that dollar remains the main currency in the world, but adds that its role has decreased in recent years. At the same time, China’s yuan has become the fourth top currency in terms of circulation in the world.

The question of how much Washington’s policies in recent decades have dented the dollar’s global dominance also remains open, Sisci says. On the one hand, the US held around half of global wealth by the end of the Second World War, and wealth is what determined the choice of the dollar as the reserve currency, the expert notes. Now the US accounts for only 20% of global wealth, but at the same time its allies, which conduct their trade in dollars, represent between 60% and 70% of the world’s riches.

Warnings of the dollar’s impending loss of its reserve currency status have been circulating in the media for decades, but the first steps in this direction emerged only recently, as the de-dollarisation “movement” grew. Now that the US has unleashed massive sanctions against Russia, this process will accelerate, Fabio Massimo Parenti states.

He points out that China is already conducting trade with many partners in the yuan, gradually moving away from the greenback, and that geopolitical crises only speed up the process.

While a certain de-dollarisation process has been launched by Russia and China, it is still in its “infancy”, a professor of Chinese studies at New Delhi’s Jawaharlal Nehru University, Srikanth Kondapalli, suggests in turn. He points out that their bilateral trade amounts to only $140 billion a year, while US-China exchange of goods (carried out in dollars) reached nearly $730 billion last year.

The professor further notes that despite the public rhetoric, Beijing is showing no rush to move completely away from the greenback.

For the yuan to become a new global financial power, Beijing must first undertake certain steps to facilitate this, China expert Francesco Sisci suggests. There has been a lot of speculation that China might use a digital renminbi to expand its currency abroad. However, apart from creating an easily accessible currency, Beijing should also establish globally recognised, independent, and strong financial markets, Sisci says.

These markets must also operate according to transparent rules and be filled with transparent companies, the expert adds.

China experts and economists diverge in their estimations of the dollar’s future and the yuan’s prospects, but most of them agree that the greenback’s position will be undermined. Professor of political economy, Fabio Massimo Parenti, points out that the global economy is already widely regionalised, with many countries using local currencies. Eventually, the dollar might cede its place as the dominant currency, he believes.

Trade in the yuan, barter in gold can dent the dollar, but not dethrone it completely, China expert Francesco Sisci suggests. The expert noted that it is possible that the world might end up split into two financial systems akin to the times of the Cold War, but he does see how the dollar’s dominance will be challenged by yuan.