By: Armand Tannous, Tana Capital

Over the past year, renewed tariff measures, legal rulings affecting executive trade authority, and election-cycle uncertainty in the United States have yet again revived what has become a familiar question in global finance: can the dollar-centred trade system withstand political volatility in Washington?

For treasury teams and banks operating in emerging markets, it is a question that influences how they structure their correspondent banking relationships and secure cross-border liquidity in order to support clients engaged in international trade.

Yet in practice, most emerging market institutions are not seriously debating whether to move away from dollar settlement. In our work advising banks across Central Asia, the Middle East, and parts of Africa, the conversations tend to focus more on maintaining stable correspondent access, managing increasingly demanding compliance expectations from Tier-1 banks, and ensuring trade finance instruments can be issued and confirmed without disruption.

When you read between the lines, what that all shows is that the dollar’s role in global finance is underpinned by existing and well-entrenched infrastructure, not simply by policy that can be adjusted with the flick of a pen.

The dollar is still king

Despite recurring de-dollarisation headlines, the US dollar continues to dominate the international financial system by a wide margin. According to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER), the dollar accounted for approximately 57% of disclosed global foreign exchange reserves as of the third quarter of 2025, compared with roughly 20% for the euro.

The same pattern is visible in market activity. The Bank for International Settlements’ 2022 Triennial Central Bank Survey, which is the most recent full survey available, shows the dollar being involved in close to 90% of global foreign-exchange transactions.

Payment flows tell a similar story. According to SWIFT’s Global Payments Data, the US dollar has consistently represented roughly 45%-48% of global cross-border payment value over the past decade. At the wholesale settlement level, the scale becomes even more striking. The CHIPS payment system, which processes large-value US dollar transactions between financial institutions, clears more than $2.2 trillion in payments each day.

When you consider all four of these figures together, it would be naïve to attribute them to simple market preference. Clearly, there is more behind it, and that is the depth of the liquidity ecosystem that exists behind the dollar.

Liquidity, not policy, drives dollar dominance

The United States remains home to the deepest capital markets in the world. The US Treasury market now exceeds $25 trillion in marketable securities outstanding, providing the benchmark asset and liquidity anchor for global financial institutions. Dollar-denominated money markets and repo facilities offer funding depth that few jurisdictions can compete with, let alone match.

Correspondent banking is one component of this broader ecosystem. Although often described as a payments mechanism, the role of correspondent banking is far more fundamental than that, as they provide banks, particularly those in emerging markets, with access to dollar funding and the ability to support trade finance issuance for clients engaged in international commerce.

That matters because trade finance is largely balance-sheet driven. While many of the instruments used today, such as letters of credit, standby guarantees, and documentary collections, depend on payment rails, they also depend on trusted counterparties, capital allocation, and enforceable legal frameworks. Faster settlement technology may be able to improve efficiency, but it cannot replace credit intermediation.

Speed is not the same as liquidity

Digital currencies and new payment technologies are often presented by central banks, fintech firms, and payments policymakers as alternatives to traditional settlement structures. According to the Bank for International Settlements’ latest CBDC survey, more than 130 jurisdictions are now exploring or developing central bank digital currencies.

Some of the underlying technology is advancing quickly. Project mBridge, for example, demonstrated that cross-border transfers and foreign exchange transactions can be completed in seconds rather than the several days often associated with traditional correspondent banking, according to BIS testing.

Those developments are significant. But we cannot confuse speed with liquidity.

A tokenised dollar is still a dollar. It is still anchored in the same US capital markets and funding system that supports today’s financial architecture. Regional digital currencies, by contrast, do not yet offer comparable funding depth or market liquidity. Faster rails may improve settlement mechanics, but they do not remove the balance-sheet demands of trade finance.

We don’t have to look too far back to see the implications of this playing out in the real world. During both the 2008 financial crisis and the 2020 pandemic-driven market disruption, global demand for dollar liquidity increased sharply. In response, the Federal Reserve expanded US dollar liquidity swap lines with major central banks to stabilise funding markets, showing how central dollar liquidity is to the global system.

The correspondent banking market itself has evolved in a similar direction. According to the BIS’s analysis of global correspondent banking trends, the number of correspondent banking relationships declined by roughly 25% between 2011 and 2022 as compliance requirements and regulatory expectations intensified.

Yet rather than dispersing global payment flows into alternative systems, this decline concentrated activity further among institutions operating within the deepest liquidity pools.

Now, let’s consider what this means for banks in emerging markets. While they may diversify their trade partners or explore local-currency settlement in certain bilateral corridors, and while digital infrastructure will continue to improve the speed and transparency of their cross-border payments, they will, in effect, remain tied to the US dollar system. When measured against liquidity depth, capital market scale, and the global acceptance of trade finance instruments, the dollar-based ecosystem has no comparable peer.

This certainly does not mean that the system is static. You don’t need to look any further than ISO 20022 migration, tokenisation initiatives, and the rise of digital settlement platforms to see that payment infrastructure is evolving and will continue to modernise how international transactions are processed.

But none of these advancements is likely to change, in the near term at least, the underlying US-dollar-based liquidity hierarchy that has been built up and solidified for decades.

Change will be gradual

Global trade depends on access to deep capital markets, reliable settlement infrastructure, and widely accepted funding currencies. On each of those measures, the dollar dominates.

Political developments may shape the headlines, but the architecture of global liquidity moves far more slowly.

For now, and likely for some time to come, the mechanics of international trade still run overwhelmingly through the US dollar.