By: Vincent Deluard, Director - Global Macro Strategy
The U.S. dollar remains the world’s dominant reserve currency, but its long-term trajectory is increasingly shaped by structural constraints rather than cyclical strength. As of early 2026, rising fiscal deficits and persistent current account gaps are placing pressure on confidence, yet global capital markets continue to rely on the dollar for trade settlement and reserve storage. This tension is reshaping expectations around how far and how fast the currency can weaken. The result is a slow grind lower rather than a disorderly adjustment.
Vincent Deluard, StoneX Group Director of Global Macro Strategy, has analyzed global reserve currency transitions across multiple historical cycles. His work focuses on how institutional credibility, capital mobility, and settlement infrastructure determine whether a currency can realistically replace the U.S. dollar.
The U.S. dollar continues to benefit from its entrenched role in global finance even as confidence erodes at the margin. Deluard observes that "nobody's happy with the current system", reflecting widespread dissatisfaction with dollar dominance. However, reserve currencies are chosen for functionality rather than popularity, requiring deep liquidity and reliable legal frameworks. Consequently, persistent reserve demand continues to absorb dollar supply despite widening fiscal and trade imbalances.
The lack of a credible successor prevents abrupt repricing of the U.S. dollar. Deluard notes that the Chinese yuan cannot function as a reserve asset because "you need authorisation from the exchange administration to move money outside of China". He also dismisses gold and digital assets as impractical, describing precious metals as a "barbarous relic" for modern settlement systems. As a result, dissatisfaction with the dollar leads to diversification at the margins rather than wholesale abandonment.
The dollar remains central to global trade and reserves, and no alternative currency offers comparable liquidity, openness, and institutional trust.
Capital controls, governance issues, and limited financial depth restrict the reserve potential of currencies such as the Chinese yuan.
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--- Written by Lindo Xulu, StoneX TV Journalist
--- Expert: Vincent Deluard, StoneX Group Director of Global Macro Strategy
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