The Shift Away From the US Dollar: What Canadian Businesses Need to Know

For Canadian businesses engaged in international trade, the global shift toward de-dollarization is a trend worth watching. The US dollar has traditionally been the backbone of global commerce, facilitating everything from commodity pricing to cross-border transactions. However, as more countries seek alternatives—whether due to geopolitical tensions, economic sanctions, or shifts in monetary policy—the way businesses settle trade and manage currency risk is evolving. This transition could impact exchange rate stability, transaction costs, and financial strategies for Canadian companies operating in global markets.

While the US dollar remains dominant, the rise of relying on alternate B2B payment methods is reshaping global trade. For Canadian businesses, adapting to a more diversified currency environment may require new risk management strategies, flexible payment solutions, and a keen understanding of how these changes could influence trade partnerships and financial planning. Keeping a close eye on this shift will be essential for businesses looking to stay competitive in an increasingly multipolar economic world.

What is de-dollarization?

De-dollarization refers to the growing trend of reducing reliance on the US dollar in international transactions. For decades, the US dollar has been the world’s dominant reserve currency, playing a central role in global trade—especially in key sectors like oil, gold, and agriculture. Businesses engaged in international trade have traditionally used the US dollar, even when dealing with partners outside the United States.

However, in recent years, geopolitical tensions, economic shifts, and regulatory changes have accelerated the move away from the US dollar. Factors such as US monetary policies, the increasing use of economic sanctions, and evolving political dynamics have led many countries and businesses to explore alternatives for trade and investment. For Canadian businesses operating internationally, this shift presents both challenges and opportunities.

How do we know de-dollarization is actually happening?

De-dollarization is no longer just a theoretical concept—it’s already unfolding in various ways across global markets. From shifting trade agreements to changes in foreign reserves, there are clear indicators that countries and businesses are actively reducing their reliance on the US dollar. Here are some of the key signs pointing to this trend.

Increased use of alternative currencies in trade: More countries are signing bilateral trade agreements that bypass the US dollar. For example, China and Russia have expanded trade in yuan and rubles, while India has engaged in rupee-based trade with multiple partners. This reduces dependency on the US financial system.

Declining share of US dollar in global reserves: Central banks worldwide are diversifying their foreign exchange reserves, reducing the proportion held in US dollars. The dollar's share in global reserves has steadily declined as countries increase holdings in euros, yuan, and gold.

Shift in commodity pricing away from the US dollar: Historically, commodities like oil and gold have been priced in US dollars. However, some oil-producing nations, including Saudi Arabia, have explored pricing oil in other currencies, such as the Chinese yuan, which could signal a major shift in global trade.

Major economies pushing for monetary independence: Economic powerhouses like China, India, and the European Union are increasingly promoting their own currencies in global transactions. The expansion of the BRICS bloc, which seeks to reduce reliance on the US dollar, is another example of this trend.

Why the world is moving away from the US dollar?

The global move away from the US dollar is driven by a mix of economic, political, and technological factors. While the US dollar has long been the dominant currency in international trade and finance, recent shifts have led many countries to explore alternatives. Here’s a look at the key reasons behind this trend.

Economic sanctions and tariffs: Many countries are seeking alternatives to the US dollar due to concerns over economic sanctions and trade policies imposed by the United States. Additionally, proposed tariffs by the Trump administration, particularly on key trade partners like China and the European Union, have encouraged countries to explore non-dollar trade agreements to mitigate the impact of US trade policies.

The push for financial sovereignty: Countries want to reduce their dependence on a currency controlled by the US Federal Reserve. By diversifying their reserves and trade settlements, governments can gain greater control over their monetary policies and reduce exposure to US economic fluctuations.

Shifts in global economic power: Emerging economies, particularly China and India, play a larger role in international trade. As their influence grows, so does the use of their domestic currencies in cross-border transactions. Initiatives like China’s Belt and Road Initiative (BRI) and the promotion of the yuan in global trade reflect this shift.

Concerns over US monetary policy and inflation: The US Federal Reserve’s policies, including interest rate changes and large-scale stimulus measures, can significantly impact global markets. Some countries worry about the long-term effects of these policies on inflation and financial stability, prompting them to explore alternative reserves and settlement mechanisms.

Why should your business care about de-dollarization?

As a business involved in global trade or operating in international markets, de-dollarization is a key trend you should monitor. Here’s why:

Reduced exposure to US Dollar volatility: The US dollar is known for its fluctuations, which can cause unpredictable costs when settling payments with suppliers or customers in different currencies. For example, if you're doing business in China, by transacting in yuan (CNY) with your suppliers, you can reduce exposure to the volatility of the US dollar and better manage your currency risk.

Lower transaction costs: Payments in US dollars often involve additional conversion fees, both at the start and end of the transaction. Using local currency payments for cross-border transactions allows you to avoid these extra costs, delivering cost savings in the long run.

Avoiding economic sanctions and trade barriers: As more countries move away from the US dollar, businesses that continue to rely on it may face rising costs or trade barriers. For instance, some countries impose sanctions or penalties on US dollar transactions, making doing business with them more expensive and complicated.

Strengthened business relationships: Paying in a supplier’s local currency can foster goodwill and build trust. It demonstrates your commitment to working within their economic framework, which may strengthen long-term business relationships and lead to better pricing or favourable payment terms.

Aligning with global financial trends: By adopting local currency payments and reducing your reliance on the US dollar, your business aligns with the broader de-dollarization trend. This strategy positions your business as forward-thinking and adaptable to shifting global economic trends.

How can MTFX help your business navigate the de-dollarization trend?

At MTFX, we understand the complexities of managing international payments in an ever-evolving global economy. Our suite of fintech solutions for international payments is designed to help businesses like yours reduce reliance on the US dollar and manage the challenges associated with currency risk. Here’s how we can assist:

Multi-currency accounts with support for 20+ currencies

MTFX's multi-currency accounts allow you to hold and transact in various currencies, reducing reliance on the US dollar. Whether you need to pay suppliers in China using CNY or deal with European partners in EUR, our accounts enable you to hold balances in these emerging market currencies without the need for constant conversion. This helps you manage cash flow more effectively, avoid conversion fees, and take advantage of favourable foreign exchange rates.

Better-than-bank exchange rates and low fees

One of the key benefits of using MTFX is our competitive foreign exchange (FX) rates. We offer rates that are often better than traditional banks, allowing your business to make international payments at a lower cost. Our transparent pricing structure ensures you know exactly what you’re paying, with no hidden fees or markups, helping you save money on each transaction.

Currency risk management to protect against volatility

Fluctuations in currency risk can significantly impact your bottom line, especially when managing multiple currencies. MTFX offers hedging currency risk services to help you protect your business from unpredictable shifts in exchange rates. By locking in foreign exchange rates in advance, you can avoid the risks associated with currency volatility and ensure predictable international payments.

Fast payment processing with no delays

MTFX’s payment processing system ensures faster, more efficient international transactions. With direct access to global payment networks, you can send payments to suppliers in their local currency, avoiding the delays that come with traditional banking systems. This allows for smoother supply chain operations and quicker settlement of cross-border transactions.

Payment system integration

MTFX integrates with your existing systems to simplify your payment processing. By paying suppliers in their preferred local currencies, tracking your payments in real-time, and streamlining accounting, we reduce errors and provide greater visibility over your international transactions.

Expert guidance and support 

Navigating the complexities of international business and foreign exchange can be daunting. MTFX’s team of experts is here to guide you through the intricacies of FX management, helping you set up multi-currency accounts, implement hedging strategies, and optimize your payment processes. We provide the tools you need to make informed decisions and reduce the risks tied to currency risk in an evolving global landscape.

The future of global trade: de-dollarization and your business

The shift toward de-dollarization is more than just a passing trend—it’s a fundamental change in how the global economy operates. As more countries move away from the US market, businesses that continue to rely on it may face rising costs, increased currency risk, and barriers to trade in certain markets.

By aligning your business with the global de-dollarization trend, you can reduce dependence on the US dollar, save on transaction costs, and position yourself for success in an evolving global economy. MTFX’s multi-currency accounts, competitive FX rates, and hedging currency risk solutions make it easier for your business to adapt to this change and streamline your cross-border transactions.

The global financial landscape is shifting, and businesses that embrace de-dollarization will be better positioned to thrive in the years to come. Partnering with MTFX ensures that you stay ahead of the curve, avoid unnecessary costs, and make the most of the opportunities presented by global trade.

Adapt to de-dollarization: Future-proof your business with MTFX

De-dollarization is more than just a buzzword—it’s a powerful global shift that is reshaping the future of international trade. As Canadian businesses, it’s essential to adapt and align with these changes to remain competitive. MTFX offers the tools and expertise you need to navigate this evolving financial landscape. From multi-currency accounts to hedging currency risk, we provide solutions that help you pay in local currencies, manage foreign exchange risks, and save money on cross-border payments.

Ready to align your business with the global trend of de-dollarization? Sign up with MTFX today and start optimizing your international payments.

FAQs

1. Will de-dollarization affect Canadian businesses?

Yes, Canadian businesses engaged in international trade may need to adjust their currency risk management strategies. If trade partners move away from the US dollar, businesses may have to negotiate new payment terms or use alternative currencies.

2. Which currencies are being used as alternatives to the US dollar?

The Chinese yuan, the euro, and regional currencies like the Indian rupee and British pound are increasingly being used for international transactions. Some countries are also exploring central bank digital currencies (CBDCs).

3. How does de-dollarization affect exchange rate risks?

If your business is used to transact in US dollars but is forced to switch to another currency, it may face new exchange rate fluctuations. This could lead to increased costs or the need for stronger currency hedging strategies.

4. Does de-dollarization mean the US dollar will lose its global dominance?

While de-dollarization is growing, the US dollar remains the world’s most widely used reserve currency. However, as alternative financial systems develop, the dominance of the US dollar may gradually decline over time.

5. How does de-dollarization impact commodity prices?

Many commodities have traditionally been priced in US dollars. If major producers begin pricing these goods in other currencies, it could lead to shifts in market dynamics and currency valuation.

6. What industries are most affected by de-dollarization?

Industries that are reliant on global supply chains, such as energy, mining, agriculture, and manufacturing, may be most impacted. Financial services and banking are also adjusting to new currency settlement trends.

7. How can businesses manage risks associated with de-dollarization?

Businesses can hedge currency risks, establish multi-currency bank accounts, diversify trade partners, and stay informed about global financial developments. Working with financial advisors and banks that support multi-currency transactions can also help.

8. Is de-dollarization a long-term trend or a temporary shift?

While the US dollar is unlikely to disappear as the dominant currency overnight, de-dollarization is a growing trend. As more countries and businesses explore alternatives, the global financial system will continue to evolve.