The world’s de-dollarization push continues, but this time, it’s America’s allies who are pulling back from greenbacks.
Canadian Prime Minister Mark Carney announced last week a $25 billion sovereign wealth fund to bolster domestic infrastructure, part of an effort to make Canada’s economy less dependent on the U.S.
The move follows France’s withdrawal of all of its 129 tons of gold held in the Federal Reserve Bank of New York between July 2025 and January 2026. France, considered America’s oldest ally, instead replaced the gold with an updated bullion and stored it in Paris—making $15 billion from selling its old stockpile.
Governor of the Bank of France Francois Villeroy de Galhau said the decision “was not politically motivated,” but the last time France repatriated gold was quietly between 1963 and 1966, fearing the U.S. mounting debt would result in a devaluation of the dollar against gold, which ultimately accelerated the U.S. ending the Bretton Woods system and the gold standard.
Sana Ur Rehman, a EBC Financial Group market analyst, argued these actions are different from past efforts to de-dollarize because they are coming from the U.S.’s long-established allies. While sanctions and other policies have intended to sustain U.S. trade dominance or punish adversaries, Ur Rehman said those efforts are backfiring and hurting the U.S.’s relationship with key global confederates.
“These are not the actions of enemies,” Ur Rehman wrote in a note published Tuesday. “They are the actions of allies and partners who have watched the United States weaponize the dollar-based financial system, and have quietly concluded they need to reduce their exposure to it.”
“That shift,” Ur Rehman continued, “driven by allies rather than adversaries, is what makes the current moment different from anything in the past 80 years of dollar dominance.”
De-dollarization has been happening for decades—greenbacks’ share of global foreign exchange reserves have fallen from 71% in 1999 to 57% today, a 25-year low—but the Iran war has put a brighter spotlight on this phenomenon and what it could mean for a shifting world order decades down the line.
Following the de facto closure of the Strait of Hormuz, through which 20% of the world’s oil usually passes, industry exports said some ships have been able to pass through the chokepoint by paying in Chinese yuan. The use of the petroyuan signaled to some economists the weakening of the petrodollar, or the exclusive use of U.S. currency to trade oil. The petrodollar remains the dominant currency used in global oil trade.
U.S. sanctions and de-dollarization
During the past 20 years, the U.S. has imposed about 70 active sanctions effecting more than 9,000 individuals, companies, and economic sections—more restrictions than the EU, United Nations, and Canada combined. As a result, economists have said these sanctions have eroded favorability toward the dollar from some of America’s adversaries.
Following penalties placed on Russia in the early 2010s following its annexation of Crimea, Russia agreed to a currency swap with China worth 150 billion yuan, about $25 billion. In 2023, Saudi Arabia and China signed a $7 billion currency swap agreement. A Deutsche Bank report recently found that while 90% of cross-border trade in North and South America is done through the petrodollar, only about 20% of trade invoicing in Europe and 70% in the Asia-Pacific is done through the petrodollar.
The Trump administration’s decision to pursue war in Iran, as well as other aggressive trade moves such as tariffs, have sent the message to other countries that the dollar may not be as rock-steady as it once was, according to David Wight, a historian at the University of North Carolina at Greensboro.
“The increasing aggressiveness of the United States in multiple fields—both in terms of sanctions and in terms of warfare—has caused more countries to kind of wonder, ‘Do we want to be completely tied or dependent on the dollar if things go sour for whatever reason?’” Wight told Fortune.
The ‘paradox’ of U.S. sanctions
Ur Rehman said U.S. allies pulling away from U.S. assets could lay the groundwork for other countries following suit, creating a snowball effect of countries relying less on American financial systems. In January, Emanuel Mönch, former head of research at the Germany’s central bank Bundesbank, said tensions with the U.S. could drive Germany to move its gold away from an American central bank. Germany holds 1,236 tons of gold at the New York Fed, about 37% of its total reserves.
“Given the current geopolitical situation, it seems risky to store so much gold in the U.S.,” Mönch told German financial newspaper Handelsblatt. “In the interest of greater strategic independence from the U.S., the Bundesbank would therefore be well advised to consider repatriating the gold.”
Ur Rehman is not the first expert who has flagged U.S. sanctions as potentially having an adverse impact on American economic dominance. A November 2025 analysis published in the Cambridge University Press posited U.S. sanctions could create a bifurcated global economic system with the U.S. and its allies on one side, and China and BRICS countries on the other. Author and political scientist Dongan Tan cites the growing popularity of China’s Cross-Border Interbank Payment System, which is now used by more than 4,900 banking institutions in 187 jurisdictions.
Ur Rehman noted de-dollarization will resemble a frog in boiling water: By the time U.S. sanctions have caused enough countries to de-dollarize, global trust in the U.S. may become harder to salvage.
“The erosion is slow: percentage points per decade rather than per year. But it compounds,” Ur Rehman said. “And the paradox is that Washington cannot both weaponize the dollar system and maintain universal trust in it. These two objectives are in direct conflict.”
