Screenshot of the IIF website. 

While the US dollar has shown weakness this year, leading to speculation about the decline of dollar hegemony, the dollar-centric international economic order remains firmly in place, according to analysis.

Clay Lowery, Executive Vice President of the Institute of International Finance (IIF) and former US Treasury Assistant Secretary for International Affairs, made these remarks on the 6th during a breakfast lecture hosted by the Korea Economic Research Institute at the Korea Press Center in Jung-gu, Seoul.

"The notion of the end of dollar hegemony is periodically repeated, but reality is different," Lowery stated. "The dollar-centric international economic and financial order is still solidly maintained."

According to IIF analysis, the dollar accounts for approximately 60% of global foreign exchange reserves, over 80% of international trade settlements, and half of all global bond issuances.

"The dollar remains the pivot of the international financial system," he said. "The world is not entering a post-dollar era, but rather a multi-layered dollar era where the dollar's role is expanding and evolving."

This signifies a phase where the dollar-centric system is not dismantling, but rather reorganizing into a multi-layered system encompassing physical, financial, and digital realms.

Lowery highlighted that digital financial innovation is strengthening the dollar's influence, citing stablecoins.

"Major stablecoin issuers like Tether and Circle have recently emerged as significant buyers of short-term US Treasury securities, ranking as the third-largest purchasers as of Q1 2024-2025," he analyzed. "Dollar liquidity is expanding in new forms within the digital environment."

He further noted that stablecoin usage is rapidly increasing not only in the US but also in emerging markets, particularly for remittances and retail payments. "Stablecoins are not de-dollarization, but rather re-dollarization based on new technology," he assessed.

"The dollar is no longer just a currency or a means of payment, but a global financial network," he added. "Once established, such a network is virtually impossible to replace."

Regarding the weakness of the US dollar this year, Lowery emphasized that it is merely a cyclical adjustment and not a structural weakening of the dollar's role in the international financial system.

The dollar index, which measures the dollar's value against a basket of six major currencies, fell from the 110s in January of this year, dipped to the 96s in September, and recently climbed back above the 100 mark.

In response to interpretations that the surge in gold prices and the increased proportion of gold in major countries' foreign exchange reserves are signals of departure from dollar hegemony, he stated, "The rise in gold prices is merely a price valuation effect," and "It is not a strategic move to reduce dollar holdings."

Yonhap News Agency