Credit: CFP
AsianFin -- The U.S. dollar tightened its grip on global finance in May, accounting for 48.46% of international payments, according to the latest data released by SWIFT. The euro followed at 23.56%, while China’s yuan saw a sharp drop to just 2.89%, slipping to sixth place—below even the Canadian dollar.
This decline comes amid rising calls for “de-dollarization” in global trade, yet the greenback’s dominance remains firmly intact. Even with the U.S. facing sovereign credit rating downgrades and ongoing trade disputes, the dollar continues to outperform, underscoring its resilience in a fragmented geopolitical environment.
While the euro once came close to matching the dollar—approaching a 40% share in its heyday—its influence has waned in recent years. Meanwhile, the dollar has maintained a commanding lead.
But perhaps the most surprising movement in May was the sharp drop in yuan usage. Just months ago, the Chinese currency surpassed the yen to become the world’s fourth most-used payment currency. Now, with its share plunging below 3%, the renminbi has been overtaken by both the yen and the Canadian dollar.
Is this the beginning of a retreat in China’s long-standing push to internationalize the yuan?
Experts caution against reading too much into SWIFT data. While it remains the world’s largest messaging network for cross-border payments, it doesn’t capture all global transactions. A significant volume of trade—particularly from small exporters in cities like Yiwu, or e-commerce sales to Southeast Asia—bypasses SWIFT entirely, relying instead on wire transfers or third-party platforms like Alipay or PayPal.
In short, SWIFT reflects only the visible portion of a much broader and more complex payments landscape.
The yuan’s volatile performance isn’t new. In 2024 alone, its SWIFT share climbed from 3.8% in January to a record 4.74% in July before dipping below 3% in October. The May drop is likely another seasonal fluctuation, not a structural retreat.
Meanwhile, the hidden engine behind yuan internationalization is quietly gaining speed. China’s Cross-Border Interbank Payment System (CIPS), designed as an alternative to SWIFT, is rapidly expanding. As of June 2025, CIPS spans more than 180 countries and regions, with over 1,500 participating financial institutions. In 2024 alone, CIPS processed ¥175 trillion in transactions—up 43% year-over-year.
Since CIPS transactions are not recorded by SWIFT, the network’s rankings underrepresent yuan usage in global trade.
Some observers blamed the yuan’s SWIFT decline on the China-U.S. trade slowdown, with Chinese exports to the U.S. down 34.4% in May. But because most China-U.S. trade is settled in dollars, the impact on yuan-based payments is minimal.
More importantly, China’s trade is shifting. Exports to ASEAN, the Middle East, Africa, and India are on the rise—and so is the use of the yuan in those regions. This aligns with Beijing’s long-term strategy to deepen financial ties with emerging markets and reduce reliance on dollar-based systems.
While the yuan still lags far behind the dollar and euro in global usage, its long-term trajectory remains upward. From the rollout of digital yuan trials to the expansion of clearing banks along the Belt and Road, China is laying the groundwork for broader adoption.
The fall from 4% to 2.89% may appear steep, but it reflects deeper changes in the global financial architecture. Just as the pound sterling took a century to become a reserve currency—and the dollar rose on the back of two world wars—the yuan’s rise will take time.
In fact, the SWIFT drop could be a sign of progress: as more payments shift to systems like CIPS or are settled through local currency swap lines, China is reducing its reliance on Western-controlled infrastructure.
China has signed over 40 bilateral currency swap agreements totaling more than ¥4 trillion. These deals offer liquidity for trade outside the dollar system. At the same time, cross-border pilot programs for the digital yuan are gaining traction, with the potential to work in tandem with CIPS for broader impact.
The internationalization of the yuan is a systemic, long-term project. A temporary dip in payment rankings doesn’t alter that trajectory.
With steady progress in financial market opening, expanding CIPS coverage, and deepening engagement with emerging markets, the yuan’s global influence continues to rise—quietly but resolutely. Global payment dominance may not shift overnight, but the trend is clear: the era of a more multipolar currency world is already taking shape.
