Dedollarization measured through the rising influence of the Renminbi

The United States dollar (USD) has maintained its position as the world's dominant reserve currency since the mid-20th century, granting the U.S. significant economic and geopolitical advantages. However, in recent decades, efforts toward de-dollarization have intensified, driven by factors such as economic diversification, geopolitical tensions, and the rise of alternative financial systems. This thesis examines de-dollarization through the lens of the growing influence of the Chinese Renminbi (RMB), particularly within the BRICS nations. The study begins by outlining the historical context of the dollar's dominance and the mechanisms that have sustained its global hegemony. It then explores the role of BRICS in challenging this financial order through institutional initiatives such as the New Development Bank, currency swap agreements, and increased reliance on non-USD trade settlements. Additionally, the research presents an empirical analysis of the changing global currency landscape using an autoregressive distributed lag (ARDL) regression model. This model, based on the methodologies of Tovar and Nor (2018) and refined by Righi (2019), measures the elasticity of various currencies, particularly the RMB, in response to shifts in the USD and other major reserve currencies. The findings indicate a gradual but notable shift in the composition of global reserves, with the RMB gaining traction, albeit still trailing behind the USD and the Euro in international usage. While de-dollarization efforts have made measurable progress, structural advantages such as liquidity, financial stability, and legal protections continue to underpin the USD's global dominance.