Global Tariffs and the Pursuit of Monetary Sovereignty: A Cross-Regional Comparative Analysis of De-Dollarization Strategies

This study conducted a cross-regional comparative analysis of de- dollarization strategies pursued by thirteen emerging and frontier economies: Angola, Ghana, Kenya, Nigeria, Zimbabwe, South Africa, Egypt, Iran, Argentina, Brazil, Russia, Vietnam, Turkey, and Indonesia. The research explored how these countries have sought to reduce their reliance on the U.S. dollar, particularly in light of the 2025 global imposition of a 10% U.S. tariff on imports. Using a multidimensional framework, the study evaluated the design, implementation, and effectiveness of de- dollarization efforts through economic, institutional, and geopolitical lenses. Findings reveal that while macroeconomic stability and institutional quality are critical prerequisites, geopolitical realignments—particularly regional monetary cooperation—have significantly influenced the trajectories and outcomes of de-dollarization efforts. The study concludes with targeted policy recommendations. 

Introduction

The U.S. dollar has long served as the cornerstone of the global financial system, underpinning international trade, investment, and monetary policy coordination. As the world’s primary reserve currency and default medium for cross-border transactions, the dollar confers benefits of liquidity, pricing stability, and global acceptability. However, for emerging and frontier economies, this dollar-centric architecture imposes significant structural constraints. These include reduced monetary policy independence, heightened vulnerability to interest rate cycles and liquidity shocks originating from the U.S. Federal Reserve, and the risk of capital flight and exchange rate instability during global risk-off episodes.

Over the past two decades, a growing number of countries have sought to reduce their exposure to these risks by pursuing de-dollarization, a deliberate policy effort to decrease reliance on the U.S. dollar in domestic financial systems, external trade, and foreign reserve composition. While de-dollarization has traditionally been associated with responses to internal crises, such as hyperinflation, balance-of-payments instability, or loss of confidence in the domestic currency, it is increasingly influenced by external geopolitical dynamics. These include the expansion of financial sanctions, the strategic use of the dollar in foreign policy, and the evolving architecture of regional monetary cooperation.

One such inflection point occurred in April 2025, when the United States imposed a universal 10% tariff on all imports, affecting trading partners across all regions of the world regardless of prior bilateral agreements. Though conceived as an economic protectionist measure, the tariff functioned in practice as a global geopolitical shock, forcing countries to reconsider their exposure not only to U.S. trade flows but also to the structural dominance of the dollar in trade invoicing, payments, and reserve management.

In this context, de-dollarization has evolved from a narrow macroeconomic objective into a strategic pillar of national and regional economic resilience. Countries are increasingly exploring alternative reserve assets, regional payment systems, bilateral currency swap lines, and the use of central bank digital currencies (CBDCs) as instruments to diversify away from the dollar-centric system.

This paper offers a comprehensive comparative analysis of de-dollarization strategies implemented across thirteen emerging and frontier economies: Angola, Ghana, Kenya, Nigeria, Zimbabwe, South Africa, Egypt, Iran, Argentina, Brazil, Russia, Vietnam, Turkey, and Indonesia. These countries represent a diverse cross-section of geographic regions, macroeconomic profiles, and institutional arrangements/settings. The analysis focuses on three interrelated objectives:

1. identify the policy instruments and mechanisms adopted to promote de-dollarization,

assess how domestic economic, institutional, and political factors affect the success or failure of these strategies,

2. evaluate the catalytic impact of the 2025 U.S. tariff shock on national and regional monetary realignment.

3. By integrating insights from international finance, monetary economics, and global political economy, this study contributes to the ongoing debate on the sustainability of the existing financial order and the prospects for a more multipolar monetary system. It also offers practical insights for policymakers and international financial institutions seeking to balance global integration with national monetary sovereignty in an era of rising geopolitical fragmentation.

The motivation for the study is that despite a growing body of work on de-dollarization, much of the existing literature remains either highly country-specific or conceptual, lacking systematic cross-country analysis that integrates both domestic institutional factors and external geopolitical dynamics. Moreover, few studies account for how regional monetary frameworks such as BRICS initiatives, AfCFTA’s Pan-African Payment and Settlement System (PAPSS), or ASEAN’s Local Currency Settlement (LCS) arrangements enable or constrain de-dollarization efforts. This study addresses these gaps through a multi-dimensional, comparative framework that evaluates de-dollarization strategies in thirteen countries across Sub-Saharan Africa, Latin America, the Middle East, and Asia. By bridging macroeconomic theory, institutional economics, and international political economy, it offers a comprehensive perspective on how countries navigate monetary sovereignty in an increasingly fragmented global order.

The study makes four key contributions to de-dollarization literature. First, it provides a comparative evaluation of strategy design and outcomes by systematically analyzing and categorizing the de-dollarization strategies employed by a diverse set of emerging and frontier economies, highlighting differences in design, implementation, and outcomes across contexts. Second, it incorporates a structured framework that links macroeconomic indicators (e.g., inflation, FX reserves), institutional quality (e.g., central bank independence), and political factors (e.g., regime stability, international alliances) to the success or failure of de-dollarization efforts. Third, it uniquely positions the 2025 U.S. global tariff as an exogenous geopolitical shock and examines how it served as a trigger for monetary realignment, trade reorientation, and reserve diversification in affected countries. Fourth, it highlights the growing importance of regional financial infrastructures, such as BRICS financial platforms, ASEAN’s bilateral currency swaps, and intra-African payment systems in facilitating non-dollar trade and reducing systemic vulnerability to the dollar-centric financial order. Thus, by linking the micro-foundations of monetary reform with the macro-dynamics of geopolitical realignment, this paper offers both theoretical insight and policy relevance for scholars, central bankers, and international financial institutions engaged in the evolving discourse on global currency diversification.

Finally, this paper investigates the underlying conditions and emerging patterns of de-dollarization across a diverse set of emerging and frontier economies. It does so through four interrelated research questions designed to connect strategy design with institutional effectiveness and geopolitical context. Each question is guided by theoretical foundations from international finance, monetary economics, and political economy. The four questions are: 1. What strategies have these countries adopted to achieve de-dollarization? 2. How do economic, institutional, and political factors influence their effectiveness? 3. In what ways did the 2025 U.S. global tariff alter these countries’ monetary trajectories? and 4. What regional mechanisms support the transition toward monetary sovereignty?

The rest of the study is structured as follows: Section 2 reviews extant literature on de-dollarization. Section 3 examines the conditions and emerging pattens of de-dollarization. Section 4 presents the qualitative methodology and results. Section 5 provides conclusions and policy recommendations. Section 6 presents study limitations and areas of further study.

Literature Review

Our study builds on a broad and evolving literature on financial dollarization, currency substitution, and monetary sovereignty in emerging markets. The foundational research includes the work of Ize and Levy-Yeyati (2003), who provided a theoretical model explaining the coexistence of foreign and domestic currencies under financial dollarization, highlighting the role of currency substitution and liability dollarization in economies with unstable monetary policies. Reinhartet al. (2003) introduced the concept of “original sin,” which describes emerging markets’ inability to borrow abroad in their own currencies, resulting in persistent currency mismatches and vulnerability to external shocks. Kokenyneet al. (2010) examined the sequencing and effectiveness of de-dollarization policies, emphasizing the importance of macroeconomic stabilization, legal reforms, and financial sector deepening. They noted that successful de-dollarization is gradual and depends heavily on building trust in the domestic currency.

Recent contributions have added a geopolitical lens to the discussion. Eichengreenet al. (2022) analyze the weaponization of the dollar, particularly through financial sanctions and trade restrictions, and argue that such actions may accelerate global de-dollarization by incentivizing the development of alternative systems. Similarly, the Bank for International Settlements (BIS) (2023) explores the role of central bank digital currencies (CBDCs) in facilitating cross-border settlements and enhancing monetary sovereignty among emerging markets.

Additional empirical work by Baliñoet al. (1999) and Jeanne (2003) provides case-study evidence on dollarized economies, while studies by Armas and Ize (2006) and Garcia-Escribano (2010) offer region-specific assessments of Latin America’s experiences with de-dollarization. These studies show that countries with strong institutions, inflation targeting regimes, and sound fiscal frameworks are more likely to succeed. Further, Akyüz (2021) provides a critical evaluation of the risks developing countries face in a dollar-dominated financial system, while Subramanian and Kessler (2013) examine the emergence of China as a challenger to the U.S. dollar through trade and financial diplomacy. Recent International Monetary Fund (International Monetary Fund (IMF), 2022) and United Nations Conference for Trade and Development (United Nations Conference on Trade and Development (UNCTAD), 2023) policy reports highlight the role of regional monetary platforms, such as BRICS and AfCFTA, in enabling cross-border local currency trade.

Conditions and Emerging Pattens of De-dollarization

The study examines four related questions that are designed to connect strategy design with institutional effectiveness and geopolitical context. A review of the de-dollarization strategies employed across the thirteen selected emerging and frontier economies presented in Table I reveals a diverse array of policy instruments, tailored to each country’s macroeconomic conditions, institutional capacity, and geopolitical positioning. Broadly, these strategies fall into two categories: market-driven (organic) and policy-driven (interventionist) approaches. Market-driven de-dollarization typically arises from improved macroeconomic stability, declining inflation, and enhanced confidence in the domestic currency, leading to the spontaneous substitution of local for foreign currency in both financial intermediation and trade settlement. In contrast, policy-driven strategies involve deliberate government or central bank actions, including legal prohibitions on foreign currency invoicing for domestic transactions (e.g., Zimbabwe, Nigeria), the promotion of local currency bond markets (e.g., Brazil, Vietnam), diversification of FX reserves away from the dollar (e.g., Russia, Iran), and bilateral trade and settlement agreements in non-dollar currencies (e.g., yuan-ruble, real-yuan, or dirham-pound arrangements). Countries such as Russia and Iran have advanced comprehensive strategies combining reserve reallocation, payment system reform, and regional monetary cooperation, often under the impetus of sanctions or geopolitical exclusion. Meanwhile, economies like Kenya and Ghana have pursued technological innovations, such as mobile money and digital payment platforms to deepen the use of domestic currency in retail finance and cross-border remittances. The comparative evidence suggests that while policy activism is critical, the long-term success of de-dollarization hinges on institutional credibility, sustained macroeconomic discipline, and the availability of viable regional or bilateral alternatives to the dollar in trade and capital flows.

Table I. Comparative Matrix of De-Dollarization Performance

Country	Dollarization level	Institutional strength	Policy strategy	Tariff impact response
Russia	2	5	5	5
Iran	3	4	5	5
Brazil	3	4	4	4
Turkey	4	3	4	3
Vietnam	4	4	3	3
Argentina	5	2	3	4
Indonesia	4	4	3	3
Egypt	4	3	3	3
Ghana	4	3	3	3
Kenya	4	3	3	3
Nigeria	5	2	2	2
Angola	5	2	2	2
Zimbabwe	5	1	1	1

The effectiveness of de-dollarization strategies is not determined solely by policy intent or design, but by a complex interplay of economic fundamentals, institutional capacity, and political context. Countries with low and stable inflation, diversified export structures, adequate foreign exchange reserves, and flexible yet credible exchange rate regimes are better positioned to reduce reliance on foreign currencies without inducing macroeconomic instability. At the institutional level, de-dollarization efforts are more likely to succeed where central banks operate with functional independence, legal mandates are consistently enforced, and financial regulatory frameworks are transparent and predictable. Political variables are equally important: countries with stable regimes, credible international alignments, and low exposure to external sanctions or capital flight exhibit greater public trust in domestic currency policies. Empirical patterns across the thirteen-country sample confirm this multidimensionality. Strategic reformers such as Brazil, Russia, and Vietnam combined institutional credibility with macroeconomic stabilization and regional monetary engagement. Constrained reformers, including Ghana and Egypt, demonstrated intent but were hindered by inflationary pressures and debt vulnerabilities. Reactive responders such as Zimbabwe and Nigeria exhibited policy inconsistency, frequent reversals, and weak institutional anchors, resulting in fragile or unsustainable de-dollarization outcomes. These findings are consistent with the “original sin” hypothesis (Reinhartet al., 2003), which posits that macroeconomic volatility and weak institutions perpetuate external currency dependence. They also reinforce the broader literature on the importance of institutional credibility and governance quality in achieving durable monetary reform.

The imposition of a universal 10% tariff by the United States in 2025 functioned as an exogenous geopolitical shock that materially influenced the monetary trajectories of many emerging and frontier economies. Beyond its immediate trade and growth implications, the tariff regime served as a catalyst for monetary realignment, compelling policymakers to reassess the systemic risks associated with overreliance on the U.S. dollar. In several cases, the tariff accelerated pre-existing de-dollarization efforts by legitimizing concerns over the dollar’s role as a potential instrument of economic coercion, as suggested by Eichengreenet al. (2022). Countries such as Russia, Iran, and Brazil responded by deepening bilateral and regional settlement arrangements in non-dollar currencies, while others, including Indonesia, Kenya, and Egypt expanded their participation in regional payment systems such as ASEAN’s Local Currency Settlement Framework and the Pan-African Payment and Settlement System (PAPSS). Even in traditionally dollar-reliant economies like Nigeria and Zimbabwe, the tariff shock prompted rhetorical shifts toward monetary sovereignty, though implementation remained inconsistent. This before-and-after comparative analysis reveals that the 2025 tariff regime functioned as a trigger, amplifier, or accelerator of de-dollarization depending on the country’s institutional readiness and strategic orientation. The episode underscores how external geopolitical disruptions can influence internal monetary behavior, reinforcing the need for diversified trade invoicing, local currency liquidity mechanisms, and broader participation in regional monetary infrastructures.

While national reforms remain essential to de-dollarization, the transition toward full monetary sovereignty is increasingly contingent upon access to robust regional financial infrastructures that facilitate non-dollar cross-border settlements, liquidity support, and trade financing. Regional mechanisms provide an institutional alternative to the dollar-dominated global financial system by enabling countries to engage in local currency trade, hedge exchange rate exposure, and pool reserves. Among the most prominent platforms is the BRICS+ financial architecture, which includes the Contingent Reserve Arrangement (CRA), bilateral currency swaps, and ongoing initiatives to establish an integrated cross-border payment system denominated in member currencies. Similarly, the Pan-African Payment and Settlement System (PAPSS), developed under the AfCFTA framework, allows for real-time settlement of intra-African transactions in local currencies, thereby reducing the need for intermediary currencies such as the dollar or euro. In Southeast Asia, the ASEAN Local Currency Settlement (LCS) Framework supports bilateral trade in national currencies through coordinated central bank agreements. China has also promoted yuan-based alternatives to SWIFT through its Cross-Border Interbank Payment System (CIPS) and a growing network of bilateral currency swap lines with more than 30 countries. In the Gulf region, initiatives to denominate oil trade in yuan, rupees, or euros signal a gradual erosion of the petrodollar’s dominance. These regional instruments collectively reduce the network externalities that reinforce the dollar’s global supremacy, in line with the logic of optimal currency area (OCA) theory and regional integration literature. Empirically, the study finds that countries embedded in such frameworks either through BRICS+, AfCFTA, or ASEAN, exhibit higher degrees of strategic alignment and policy coherence in their de-dollarization trajectories, suggesting that regional monetary cooperation is not ancillary but foundational to long-term currency diversification.

Methodology

The study employs a qualitative comparative analysis supported by structured expert-based evaluation presented in Table II to high-light the results of de-dollarization efforts. Countries were selected based on their geographic diversity, dollar exposure, and degree of political-economic integration. Data were obtained from IMF Financial Soundness Indicators, World Bank Worldwide Governance Indicators, central bank publications, and trade statistics. To facilitate a structured comparative analysis of de-dollarization performance across countries, this study employs a four-variable scoring framework that captures both internal policy environments and responses to external shocks. Each country is evaluated on a standardized 1-to-5 scale across four dimensions: Dollarization Level, Institutional Strength, Policy Strategy, and Tariff Impact Response. The Dollarization Level indicator reflects the extent to which foreign currency, particularly the U.S. dollar, is used in domestic financial transactions, where a score of five indicates pervasive usage and high vulnerability to external currency volatility. Institutional Strength measures the quality of governance, regulatory transparency, and central bank independence, with higher scores denoting more credible and resilient institutions capable of sustaining monetary reform. The Policy Strategy variable captures the degree of intentionality, coherence, and duration of de-dollarization efforts, distinguishing between ad hoc crisis responses and comprehensive, long-term frameworks. Finally, Tariff Impact Response assesses how effectively each country adapted its monetary and trade practices following the 2025 U.S. global tariff shock, whether through accelerated local currency settlements, reserve diversification, or participation in regional payment mechanisms. Together, these variables provide an integrated lens through which to evaluate the readiness, effectiveness, and adaptability of each country’s path toward monetary sovereignty.

Table II. Justification for De-Dollarization Comparative Matrix

Country	Dollarization level justification	Institutional strength justification	Policy strategy justification	Tariff impact response justification
Russia	Low FX deposits (~14%), ruble-based trade expansion, reduced USD reserves (International Monetary Fund (IMF), 2023; ECB, 2023)	Strong CBI, legal enforcement, fiscal stability (WGI 2022, WB)	Clear multi-pronged strategy: ruble trade, reserve shift, SWIFT alternatives (IMF, BIS, Russian CB)	Expanded yuan trade, intensified BRICS coordination (Reuters, BIS)
Iran	Moderate use of USD due to sanctions; rial instability, gold/crypto alternatives (IMF, Bloomberg)	Relatively high state capacity; moderate regulatory quality (WGI, IMF)	Gold, crypto, barter trade, yuan-dirham use (Reuters, Bloomberg)	Reinforced dollar-alternative rhetoric, trade workaround (Iran CB, IMF)
Brazil	Low dollarization; real-dominated financial system (Garcia-Escribano, 2010, IMF FSI)	Strong legal/regulatory institutions (WGI, WB)	Local currency finance deepened; BRICS focus (IMF, CB Brazil)	Formalized local currency BRICS trade (Brazil Finance Ministry)
South Africa	Moderate FX use; efforts to deepen rand use regionally (SARB reports, Afreximbank)	Moderate-to-strong institutions, SARB credibility (WGI, IMF)	Regional currency trade push, AfCFTA alignment (SARB, Afreximbank)	SADC alignment, digital rand interest (SARB, Afreximbank)
Vietnam	Moderate-to-high FX use; policy reforms underway (IMF, WB)	Regulatory quality improving; stable governance (WB WGI)	LCS participation; inflation targeting (BI Vietnam, IMF)	ASEAN LCS expansion, intra-regional diversification (BI Vietnam)
Indonesia	FX substitution moderate; LCS initiatives active (BI Indonesia, IMF)	Institutional improvement, strong central bank (WB WGI, BIS)	Bilateral LCS frameworks, financial inclusion (BI Indonesia)	Maintained reform trajectory, regional payment links (BI Indonesia)
Egypt	High FX usage; de-dollarization plans recently activated (IMF AREAER, Egypt CB)	Governance gaps remain; reforms underway (WGI, IMF)	Policy dialogues initiated; reserve shifts limited (Egypt CB, IMF)	Initial diversification; GCC outreach (Egypt Finance Ministry)
Kenya	High FX dependence; PAPSS participant (Kenya CB, Afreximbank)	Moderate institutional quality (WGI, IMF)	PAPSS involvement, policy intent visible (Afreximbank, CBK)	Enhanced PAPSS usage, FX cost-saving rhetoric (CBK, AfCFTA reports)
Ghana	High FX deposits (~42%); reform rhetoric increasing (IMF FSI, Ghana BoG)	Governance moderately weak; legal gaps persist (WB WGI)	Public commitment made, implementation ongoing (BoG, IMF)	Policy shift aligned with AfCFTA goals (BoG, IMF)
Turkey	High inflation led to FX reliance; reforms inconsistent (IMF, Turkish press)	Erosion in institutional independence (WB, IMF)	Crisis-driven FX-linked instruments (IMF, CBRT)	Mixed, symbolic policy references (Turkish media, CBRT)
Nigeria	High FX deposit reliance (~55%); naira volatility, mixed reform path (CBN, IMF FSI)	Weak institutional performance, CBN under pressure (WGI, IMF)	Naira FX windows, mixed reform history (CBN, IMF)	Limited adjustment post-2025 (CBN, Nigerian press)
Angola	High dollarization; oil-linked USD dependence (Angola CB, IMF AREAER)	Low institutional performance; weak rule of law (WB WGI)	Ad hoc measures, oil FX earnings dominate (Angola CB)	No major response documented (Angola CB)
Zimbabwe	Extremely high dollarization; ZiG launched in 2024, limited confidence (RBZ, Reuters)	Very weak institutions; policy reversals common (WGI, IMF)	Gold-backed ZiG, de-dollarization declarations (RBZ, Reuters)	Gold-backed token announcement post-tariff (RBZ, news reports)

The comparative analysis of de-dollarization strategies across thirteen emerging and frontier economies reveals a broad spectrum of approaches shaped by heterogeneity in macroeconomic conditions, institutional strength, and geopolitical alignment. Countries such as Russia, Iran, Brazil, and South Africa emerge as strategic leaders, having adopted proactive and coordinated policies that leverage regional platforms like BRICS+, bilateral currency swap arrangements, and alternative payment systems to systematically reduce dollar dependence. A second cluster—Vietnam, Indonesia, Egypt, Kenya, and Ghana can be classified as policy reformers, characterized by gradual and institutionally anchored reforms that emphasize financial deepening, inflation targeting, and digital payment infrastructure to foster trust in local currencies. By contrast, Turkey, Nigeria, Angola, and Zimbabwe represent reactive actors, where de-dollarization has been implemented in response to crisis, often marked by policy inconsistency, macroeconomic instability, and weak institutional anchors. Across these groups, the effectiveness of de-dollarization is consistently influenced by three interrelated variables. Economic factors such as inflation volatility, reserve adequacy, and export concentration affect the capacity to manage exchange rate risk. Institutional quality, including central bank independence, legal enforceability, and regulatory transparency, shapes public confidence and policy credibility. Finally, political stability and international positioning, particularly exposure to sanctions, trade shocks, or regional alliances mediate both the willingness and ability to sustain long-term reforms. The evidence suggests that durable de-dollarization is not merely a function of policy adoption but of structural coherence across economic, institutional, and political domains.

Qualitative Results

The comparative performance matrix of qualitative results presented in Table II offers a multidimensional assessment of de-dollarization progress across thirteen emerging and frontier economies. Using a standardized 1-to-5 scale across four key indicators—dollarization level, institutional strength, policy strategy, and tariff impact response, the matrix enables cross-country comparison of both readiness and resilience in transitioning toward monetary sovereignty. The data reveals a clear stratification among countries. Russia, Iran, and Brazil stand out as top performers, exhibiting low or moderate dollarization levels, strong institutional frameworks, and well-coordinated de-dollarization strategies that were further reinforced by effective responses to the 2025 U.S. global tariff shock. In contrast, Zimbabwe, Angola, and Nigeria occupy the lower end of the spectrum, characterized by persistently high dollarization, weak institutions, and fragmented or crisis-driven policies with limited strategic follow-through. Intermediate cases such as Vietnam, Indonesia, Egypt, Ghana, and Kenya demonstrate moderate institutional capacity and reform orientation but response dimension face challenges in sustaining momentum amid external shocks. Notably, the tariff impact provides novel insight into the geopolitical adaptability of each country, with some like Argentina scoring relatively higher despite institutional constraints, suggesting that external shocks can occasionally catalyze monetary realignment. Overall, the matrix supports the paper’s central argument that successful de-dollarization requires a synergistic alignment of macroeconomic fundamentals, institutional credibility, and strategic adaptability to global economic disruptions.

Conclusion

This study demonstrates that de-dollarization is not a monolithic policy prescription but a complex, context-specific, and path-dependent process. Successful transitions away from reliance on the U.S. dollar require the strategic alignment of three critical domains: macroeconomic fundamentals, institutional credibility, and regional monetary integration. Countries that combined sustained inflation control, stable fiscal frameworks, and robust external accounts with credible institutions, particularly independent central banks, were more effective in reducing dollar reliance across domestic financial systems and external trade settlements.

The 2025 global tariff regime imposed by the United States served as a catalytic inflection point, exposing the vulnerabilities of dollar-centric trade systems and accelerating monetary diversification efforts in many countries. In strategic reformers such as Russia, Iran, Brazil, and South Africa, the tariff shock amplified momentum toward local currency settlement and regional financial cooperation. By contrast, countries with weak institutions, limited FX buffers, or politicized monetary governance, such as Zimbabwe, Angola, and Nigeria, experienced limited adaptability, further entrenching their dependence on the dollar.

The study further underscores the emerging importance of regional monetary infrastructures such as BRICS financial mechanisms, the Pan-African Payment and Settlement System (PAPSS), and ASEAN’s Local Currency Settlement Framework as essential tools for reducing the structural network advantages of the dollar. As the global economy becomes more fragmented and multipolar, the sustainability of de-dollarization will increasingly hinge on a country’s ability to embed its monetary strategy within a broader architecture of regional and South-South cooperation.

Overall, this comparative analysis provides empirical and conceptual support for viewing de-dollarization not merely as a defensive response to external shocks, but as a proactive strategy of monetary sovereignty, aimed at enhancing resilience, reducing systemic exposure, and asserting greater control over macroeconomic policy levers.

Policy Recommendations

Drawing from the cross-country evidence presented in this study, the following policy recommendations are proposed to guide governments, central banks, and international financial institutions in designing credible and durable de-dollarization strategies. First, countries must anchor de-dollarization in Macroeconomic Stabilization. That is, sustainable de-dollarization is only feasible in environments where inflation is under control, fiscal positions are sound, and exchange rate volatility is manageable. Countries should prioritize disinflation, prudent debt management, and reserve accumulation as foundational prerequisites. Second, countries must strengthen their institutional credibility and Central Bank Independence. A depoliticized and technically competent central bank is essential to building public trust in the domestic currency. Legal reforms to guarantee autonomy, transparency, and forward-looking monetary policy should be a cornerstone of reform programs. Third, countries must leverage their regional monetary platforms. Governments should deepen participation in regional payment systems (e.g., PAPSS, BRICS Pay, ASEAN LCS), local currency swap lines, and reserve pooling mechanisms to enable non-dollar trade and reduce liquidity constraints during external shocks. Fourth, countries must diversify their reserve and trade currency composition. Central banks should proactively adjust their reserve portfolios to include a broader basket of currencies such as the euro, yuan, or gold while promoting bilateral trade agreements denominated in local or regional currencies. Fifth, countries must treat geopolitical shocks as reform opportunities. External disruptions such as tariffs, sanctions, or supply chain realignments should be leveraged as political windows to initiate structural reforms, mobilize public support, and accelerate transitions toward monetary self-reliance. Hence, by adopting a comprehensive and adaptive approach, countries can better navigate the complex transition away from dollar dependence and toward a more resilient, diversified, and sovereign monetary architecture in the 21^st century global economy.

Limitations and Future Research

Limitations

A primary limitation of this study is its exclusive reliance on qualitative assessment without integration of quantitative econometric analysis. While qualitative insights are valuable for interpreting institutional dynamics and policy intent, they are inherently subjective and may introduce scoring biases. For instance, assessments of “institutional strength” or “tariff impact response” would benefit from quantifiable proxies such as central bank independence indices, foreign currency deposit ratios, or trade elasticity estimates. Furthermore, the absence of time-series or panel data analysis limits the ability to identify causal relationships or measure the temporal dynamics of de-dollarization following the 2025 tariff shock.

Future Research

Subsequent studies will consider incorporating panel data regression models that include economic variables (e.g., inflation, FX reserves, trade diversification), institutional variables (e.g., WGI governance indicators), and geopolitical variables (e.g., sanctions exposure, alliance memberships). This would allow for hypothesis testing regarding the determinants of successful de-dollarization and the moderating effects of regional financial integration. In addition, country case studies with event-study analysis around key shocks (e.g., U.S. tariffs, sanctions) could provide richer insights into the microeconomic transmission channels. Lastly, further investigation into the role of CBDCs and digital settlement platforms as enablers of de-dollarization in the post-tariff era could enhance the policy relevance of future work.