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CBDC in the Global South and the American Dollar

With China’s e-CNY and as India pilots the e-Rupee, how will the rise of central bank digital currencies in the Global South challenge the dollar’s dominance in international trade?

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Yana Sirpaul

Apr 17

CBDCs like e-CNY and e-Rupee could slowly chip away at dollar dominance by making cross-border trade cheaper, faster, and less dependent on U.S. financial systems. But real impact will take time — it depends on how widely these digital currencies are adopted internationally and whether trust in them can rival trust in the dollar.

dev khanna

Apr 13

The rise of CBDCs like China’s e-CNY and India’s e-Rupee could slowly start to challenge the dollar’s dominance in global trade, especially among countries in the Global South. Right now, most international trade is settled in US dollars, but that’s partly because there hasn’t really been a strong alternative. With CBDCs, countries might be able to trade directly in their own digital currencies, avoiding the need to convert everything into dollars.

China’s already pretty far ahead with the e-CNY and is testing it out for cross-border transactions with countries it trades a lot with. If more countries start using it for trade deals, especially in Asia and Africa, it could reduce the demand for dollars. India’s still piloting the e-Rupee, but if it gets widely adopted and used in international trade—especially with neighboring countries or within regional agreements—it could do the same.

That said, the dollar isn’t going anywhere anytime soon. It’s still trusted, super liquid, and deeply embedded in global finance. But CBDCs might start chipping away at that dominance over time, especially if they offer faster, cheaper, and more politically neutral ways to settle trade. It’s not an overnight shift, but it’s definitely something to watch.

Meher B

Apr 15

Replying to

thank you sooo much for your reply! i totally agree with you! the rise of CBDCs like china’s e-CNY and india’s e-Rupee could definitely shake things up and challenge the dollar’s grip on global trade. a lot of countries in the global south could benefit from trading directly in their own digital currencies without having to convert everything into dollars. and yeah, china's already testing the e-CNY for cross-border transactions, which is a huge step forward. if other countries get on board, especially in asia and africa, it could really reduce the dollar’s dominance. plus, there are still some privacy and security concerns around CBDCs, so it’s not going to be a quick shift. it’ll be interesting to see how this plays out over time, especially as more countries experiment with digital currencies.

but with all the new possibilities CBDCs bring, how do you think countries with already-established economic ties to the US might react to this? will they embrace the shift, or stick to the dollar to avoid rocking the boat too much?