SWIFT Data Shows US Dollar Dominance in Global Payments Strengthens – Based on data compiled by SWIFT, the global financial messaging service, the prevalence of the U.S. dollar in worldwide payments has surged to an all-time high. SWIFT’s recent transaction data reveals that the U.S. dollar was involved in a remarkable 46% of FX transactions in July, marking a new record.
Additionally, there has been a notable uptick in the utilization of the Chinese yuan in these transactions. SWIFT, a prominent global financial messaging service, facilitates connections between over 11,000 banking and securities entities, market infrastructures, and corporate clients across 200+ countries and territories through its messaging platform, products, and services.
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According to a recent report by Bloomberg, data indicates that the proportion of SWIFT FX transactions involving the U.S. dollar reached an unprecedented 46% in July. This is in stark contrast to just over a third a decade ago. SWIFT, which annually compiles about 200 million FX confirmations, has seen the surge in U.S. dollar transactions come at the expense of the euro.
The euro had its peak at a 46% share in 2012 but has since plummeted to its lowest point ever, trading slightly under a quarter. Moreover, SWIFT’s data underscores a noticeable trend in global foreign exchange markets, showcasing an increase in transactions related to the Chinese yuan. In July, more than 3% of instructions transmitted through SWIFT involved the Chinese yuan, marking the second-highest figure on record.
This is a substantial rise from the approximately 0.03% reported in 2010. An increasing number of nations are opting to distance themselves from the U.S. dollar, instead favoring the Chinese yuan or their own respective national currencies. This shift is part of a broader global movement known as de-dollarization. Leading the charge are the BRICS countries, a collective comprising Brazil, Russia, India, China, and South Africa.
Recently, the BRICS nations concluded their 15th annual summit, during which their leaders unanimously acknowledged the significance of promoting the utilization of national currencies in international trade and financial dealings. Numerous economists, among them Nobel laureate Paul Krugman, have expressed the view that the enduring dominance of the U.S. dollar is not a permanent state of affairs.
While this sentiment exists, many experts do not regard the Chinese yuan as a formidable contender capable of displacing the U.S. dollar’s supremacy. The dynamics of global economic power and currency influence are intricate and multi-faceted, making the eventual outcome of this shifting landscape a subject of ongoing analysis and speculation.