By: Prof. Khalid Wasif Al-Wazani
Jordan Daily – The recent Shanghai Cooperation Organization (SCO) meeting marks the dawn of a new economic era, spurred largely by U.S. policies that have paradoxically united both allies and rivals in pushing back against Washington, whether openly or behind closed doors.
This emerging era will render the past eighty years as no more than a historical chapter, as the world begins writing a new one—one of a rapidly forming global system that may surprise many with its pace and strength. The new and expanding G20-like bloc already accounts for over 40% of the world’s population and landmass, 37% of global trade, and represents the largest consumer base worldwide. It is also the youngest, most culturally and politically diverse region, and perhaps the most determined to escape the constraints of a unipolar system.
Yet the SCO meeting is not merely symbolic; it reflects deep shifts in the international economic order, particularly regarding global financial settlements and the role of the U.S. dollar as the dominant reserve and exchange currency. For nearly eight decades, the dollar has held sway over international trade and foreign reserves, comprising around 60% of official global reserves and nearly 80% of trade settlements. This privileged status has given the United States extraordinary power—not only in markets, but also as a political and economic tool of influence.
The Dollar Under Challenge
One of the key outcomes of the Shanghai meeting is the growing focus on developing alternative financial mechanisms that reduce dependence on the dollar. This includes the use of local currencies in trade exchanges, as well as expanding settlements in the Chinese yuan and the Russian ruble. The underlying driver is clear: to mitigate risks stemming from over-reliance on a single currency, especially given Washington’s frequent use of the dollar-based financial system as a sanctions and geopolitical tool.
China, the world’s second-largest economy, has been assertively working to promote the yuan as an alternative in global trade, at least in transactions directly involving Beijing. Its Belt and Road Initiative and numerous bilateral currency-swap agreements are key pillars of this strategy. Russia, meanwhile, has reduced its holdings of U.S. Treasury bonds while increasing reliance on gold and Asian currencies.
A Gradual Shift in Global Reserves
Despite these efforts, transitioning toward a truly multipolar currency system is complex and will take time. It took nearly a decade and a half for the pound sterling to lose its dominance after World War II. Still, the cumulative effect of regional initiatives—from Shanghai to BRICS—suggests that the global reserve map is gradually being redrawn, with the U.S. dollar no longer its uncontested anchor.
The Shanghai meeting underscores this new trajectory: a multipolar financial system where major economic blocs strengthen their monetary independence. While the dollar may not lose its status overnight, it now faces a level of competition unseen in decades. The near future will likely bring more bilateral and regional trade agreements, along with the increasing use of central bank digital currencies (CBDCs) for cross-border settlements.
Ultimately, the world economy appears to be entering a transitional phase: moving away from a unipolar dollar-dominated system toward a more diverse and multipolar one. Countries that have yet to recognize this reality—or still believe the current era is permanent—must reassess their economic strategies. They should begin, within the remainder of this decade, to diversify investment portfolios, foreign reserves, and even their exchange-rate frameworks in preparation for the new global financial order.
Khalid Al Wazani is Professor of Economics & Public policy at Mohammed Bin Rashid School of Government (MBRSG), he holds over 33 years of active participation in academic, public service, government, and private sector positions. He can be reach at khwazani@gmail.com .
