The Bank for International Settlements has published a report warning of the delicate situation facing the US dollar. According to the report, the greenback is facing a “historic stress test.”
The bank of central banks issues a warning about the dollar
Augustin Carstens, the outgoing president of the Bank for International Settlements (BIS), shared his view of the global economy in a speech this weekend. According to him, the long-established economic order is faltering, with the dollar facing a major “systemic risk.”
The bank of central banks believes that a “new era of heightened uncertainty and unpredictability” has been triggered by the geopolitical conflicts currently shaking the world, as well as the economic decisions of US President Donald Trump.
The outlook has since darkened. The announcement of widespread tariffs by the US has sent shock waves through the markets.
Deglobalization of the dollar and alternatives to the greenback
According to the BIS president, economic developments in the United States have raised broader questions about the status of the dollar:
These unusual dynamics have led to speculation in some circles about the traditional safe-haven status of the US dollar.
Augustin Carstens also notes the role of alternatives to “traditional” fiat currencies, including digital currencies and cryptocurrencies:
Major innovations such as the entry of big tech into finance, central bank digital currencies and artificial intelligence are disrupting and transforming the financial system.
Since the beginning of the year, the dollar has fallen by 10% – it is expected to experience its sharpest decline in the first half of the year since it was floated in the early 1970s. The movement away from the dollar is also gaining momentum, driven in particular by the BRICS+ countries:
However, Augustin Carstens believes that the difficulties are not insurmountable, as he points out at the end of his speech:
The challenges we face are formidable, but they are not insurmountable. By addressing structural vulnerabilities, preserving confidence in our institutions, and embracing innovation, policymakers can help build a more resilient and inclusive global economy.
The bank of central banks therefore highlights the major changes taking place in financial systems, advising adaptation rather than resistance.
