In 2026, the global cross-border currency landscape will undergo major changes.
The latest foreign exchange data from the IMF shows that the share of US dollars in global reserves is slowly declining, but in the SWIFT system, the share of US dollars in cross-border payments still ranks first.
After the Russian-India bilateral trade was settled in local currency, hundreds of billions of idle rupees were accumulated. This intuitively reflects the obvious shortcomings of local currency settlement. The global currency pattern will be completely stratified in 2026.
In recent years, many countries have been actively promoting bilateral local currency settlement in an attempt to reduce their dependence on the US dollar.
There is a view in the market that the local currency will soon completely replace the US dollar, but actual cases have poured cold water on this idea.
Take Russia and India as an example. The two countries have been engaged in energy trade for a long time, and the balance of payments gap has always existed. The Russian Cooperative Bank has accumulated a large amount of rupees, and the channels for capital activation are particularly limited. This fully demonstrates the natural shortcomings of the local currency settlement model.
The mid-2026 IIF report divides global economies into three categories, with different settlement fault tolerances.
The IMF pays attention to the proportion of foreign exchange reserves and the proportion of cross-border payments calculated by SWIFT, and considers it from multiple dimensions.
Countries are also hedging dollar risks through currency swaps, gold hoarding, and euro expansion scenarios.
CCTV Finance’s 2026 special survey on bilateral settlement shows that 67% of local currency settlement trade portfolios have long-term balance of payments imbalances, with surplus countries accumulating an average of more than 10 billion U.S. dollars in opponent country’s currency, and the annual hidden loss of idle funds is 4.2%.
From the core logic, the local currency settlement fault tolerance capabilities of different economies are clearly stratified.
Resource-exporting countries are prone to stable trade surpluses and have acceptable settlement buffers; manufacturing emerging markets have a moderate balance of import and export balances with average room for error; freely convertible developed economies have the strongest local currency settlement buffers.
Trade imbalance and the inability of currencies to be freely converted are the biggest shortcomings of local currency settlement. It is easy to hoard the currency of the opponent country, which limits the large-scale popularization of local currency settlement.
The World Bank’s 2026 cross-border trade finance report shows that the penetration rate of local currency settlement in unilateral surplus resource countries is only 28%; the penetration rate of developed economies with balanced balance of payments and free currency convertibility reaches 61%.
The case of Russia and India worth hundreds of billions of rupees has highlighted the problem of hidden costs.
Russia has maintained a trade surplus with India for a long time, resulting in Russia’s accumulated idle rupee funds exceeding 100 billion.
There are obvious obstacles in the cross-border exchange of rupees and bulk commodity procurement channels, and the extremely poor capital liquidity has quietly increased the hidden financial costs of cross-border trade.
In terms of hedging tools, the euro, RMB, and gold each have their own division of labor.
IMF data shows that the euro accounts for 21.13% of global foreign exchange reserves; SWIFT data shows that the proportion of RMB cross-border payments has stabilized in the range of 2.7%-3.1%; in the first half of 2026, the monthly net gold purchase data of global central banks continues to remain positive.
The three are not substitutes. The euro relies on the EU’s huge trade volume to stabilize its basic settlement volume, the renminbi relies on currency swaps to expand regional circulation scenarios, and gold is specifically used to hedge the risk of reserve fluctuations.
From the perspective of the full-scale market impact, at the level of global cross-border trade settlement, in areas where balance of payments is balanced and currencies are freely convertible, local currency settlement will become larger and larger. For long-term unilateral surplus and deficit trade combinations, local currency settlement is only suitable for small orders. Large-scale cross-border trade is still inseparable from third-party transit currencies at this stage.
Countries are also making up for their shortcomings and expanding local currency bonds and cross-border investment circulation channels.
At the business level of foreign trade companies, companies with multi-currency settlement and diversified overseas layouts can hedge against the risk of U.S. dollar exchange rate fluctuations. Small and medium-sized foreign trade companies that only rely on U.S. dollars for settlement and do not participate in currency swaps have higher risk exposure.
The central bank continues to hoard gold, which has gradually increased the number of pilot scenarios for gold-denominated trade.
At the asset allocation level, the U.S. dollar’s dominance in the commodity and offshore credit markets remains stable. No currency can completely replace the U.S. dollar’s dominance in the short term. Local currencies and gold are more used to diversify risks and smooth the cyclical fluctuations of the U.S. dollar.
It should be noted that this analysis is based on the static data disclosed by the IMF, SWIFT, and IIF in mid-2026. The conclusion is only suitable for the current stage. The market will change at any time and there is no fixed trend.
Adjustments to commodity prices and import and export policies can alleviate the problem of local currency hoarding; new currency swaps and cross-border investment channels can improve the shortcomings of insufficient local currency liquidity; the Federal Reserve’s monetary policy and global risk aversion will also boost demand for the U.S. dollar in stages.
The current currency stratification pattern does not represent a long-term fixed trend in the future.
In 2026, the multi-currency system will develop in layers, and we can focus on the two major directions of bilateral local currency cooperation and central bank gold allocation, combined with rational reference based on industry data.
In short, the core change in the global cross-border currency landscape in 2026 is not the rapid withdrawal of the US dollar, but the smooth transition from a single US dollar-dominated system to a hierarchical multi-currency system.
The continued popularity of global local currency settlement has effectively weakened the unilateral monopoly risk of the US dollar. However, local currency settlement also has many practical constraints, making it difficult to completely replace the US dollar’s core functions of cross-border settlement and offshore pricing in the short term.
In the future, whether bilateral local currency settlement can break through the bottleneck, how the multi-currency stratified structure will evolve, and how gold reserves and non-US dollar settlement will affect the global asset pricing logic are all worthy of our in-depth thinking and discussion.
