An Econometric Test of Whether the USD Can Return to Trade-Currency Monopoly

Rajib Kumar Sanyal; Aarya Aarya; Santosh Angadi

doi:10.36948/ijfmr.2026.v08i04.83826

An Econometric Test of Whether the USD Can Return to Trade-Currency Monopoly

Author(s)	Prof. Dr. Rajib Kumar Sanyal, Ms. Aarya Aarya, Dr. Santosh Angadi
Country	India
Abstract	This paper examines whether the United States dollar can regain monopoly-like power as the only effective means of international trade settlement in an era shaped by G-7 institutional power, BRICS enlargement, and the growing monetary agency of the Global South. Unlike descriptive accounts of de-dollarization, the paper develops a testable econometric framework using a composite Dollar Dominance Index (DDI) and complementary reserve-share specifications. The empirical strategy combines a baseline HAC-robust time- series regression, an autoregressive distributed lag/error-correction specification, stationarity tests, structural- break logic, and a robustness design for reserve, FX turnover, and payment channels. The benchmark evidence supports four conclusions. First, the dollar remains structurally dominant because of reserve inertia, foreign- exchange market centrality, deep Treasury markets, and payment-network externalities. Second, rising BRICS economic weight is negatively associated with the composite dollar-dominance measure, but the magnitude is not sufficient to imply a rapid displacement of the dollar. Third, US interest-rate strength supports short-run dollar demand, while fiscal-debt accumulation and geopolitical fragmentation create longer-run confidence risks. Fourth, the econometric evidence supports a transition from dollar monopoly to dollar-centered monetary multipolarity, not a collapse of dollar primacy. The policy implication is that the United States can preserve dollar leadership by maintaining institutional credibility, open capital markets, and financial depth, but the probability of the USD becoming the only meaningful instrument of global trade settlement is economically and geopolitically low.
Keywords	Dollar dominance; de-dollarization; BRICS; G-7; Global South; ARDL; reserve currency; international trade settlement; monetary multipolarity
Field	Business Administration
Published In	Volume 8, Issue 4, July-August 2026
Published On	2026-07-17
DOI	https://doi.org/10.36948/ijfmr.2026.v08i04.83826

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An Econometric Test of Whether the USD Can Return to Trade-Currency Monopoly

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