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De-dollarisation is one of the most poorly treated concepts in contemporary economic debate. With every transaction in yuan, some proclaim the imminent end of the dollar. Conversely, others dismiss it as a geopolitical illusion. Both interpretations fail for the same reason: they confuse the existence of a mechanism with the activation of a regime.
The reality is more demanding. De-dollarisation is neither a myth nor an event. It is a conditional process, whose dynamics depend on a parameter rarely stated explicitly: the threshold at which marginal accumulation becomes a systemic phenomenon.
A real mechanism — but not self-executing
The “inverse liquidity pump” describes a simple mechanism. If a growing share of oil flows is denominated outside the dollar, the corresponding surpluses cease to be recycled into U.S. assets, particularly Treasuries. Structural demand for U.S. debt weakens, putting upward pressure on its cost of financing.
The logic is sound. But it is static.
An accounting mechanism is not a macro-financial trajectory. Between the two lie elasticities, substitutions, and above all, orders of magnitude. In a U.S. bond market exceeding USD 25 trillion, a marginal shift in global oil flows — even by several percentage points — can be absorbed without visible effect. By contrast, a sustained reallocation in the range of 10 to 20 percent would begin to alter the structure of buyers and could translate into a noticeable increase in the term premium, particularly in a context of large deficits and reduced participation from official buyers.
In other words: the mechanism exists, but it is not self-executing. It is conditioned by a threshold.
Visible signals — but still sub-critical
Recent developments are real. Energy transactions in yuan are increasing at the margin. Experiments with alternative settlement systems are emerging, including in strategic zones such as the Strait of Hormuz. The share of the yuan in certain energy trade flows has risen faster than expected but scale remains decisive. A few transactions out of tens of thousands annually constitute a signal, not a shift. Confusing the two amounts to extrapolating a trend from noise.
The symmetrical error is to ignore them. Because these signals have a specific property: they are cumulative.
The real constraint: the destination of flows
The central issue is not the currency of transaction, but the currency of reserve.
For flows to durably move away from the dollar, they must find an alternative destination capable of absorbing large volumes with comparable characteristics: depth, liquidity, legal security and convertibility. This is the role currently played by U.S. markets — and one that alternatives still struggle to replicate.
The renminbi is advancing as a transaction currency. It remains marginal as a reserve currency. This gap is not anecdotal; it constitutes the structural constraint of the process. Substituting an invoicing currency is relatively simple. Substituting a global reserve asset is not. As long as this asymmetry persists, a significant share of international flows — even those initiated outside the dollar — will, by necessity, continue to be recycled into U.S. markets.
A coherent but constrained Chinese strategy
China is explicitly pursuing the internationalisation of the renminbi. The logic is strategic: reduce dependence on the dollar, increase financial autonomy and structure spheres of monetary influence.
However, this ambition encounters an internal contradiction. An international currency requires financial openness — capital account convertibility and free movement of capital — which is difficult to reconcile with a model based on capital controls.
This tension does not make the trajectory impossible. It makes it gradual.
A slow but irreversible dynamic
Where de-dollarisation becomes analytically interesting is not in the hypothesis of a sudden shift, but in that of marginal accumulation.
Each sanction, each restriction on access to the dollar-based financial system, each incentive to diversify payment channels produces a learning effect. Actors do not exit the dollar out of ideological conviction, but as a matter of risk management. They build alternatives the way one takes out insurance: before it is needed. This dynamic is slow, but it has a key characteristic: it is difficult to reverse. Once an alternative payment infrastructure is in place, it does not disappear.
The critical point, therefore, is not the emergence of non-dollar flows, but their accumulation to the point where they cease to be marginal and become macro-financially visible.
Conclusion
De-dollarisation is not a narrative to settle, but a variable to measure.
The “inverse liquidity pump” describes a real possibility, whose early signs are observable but whose activation depends on strict conditions: the scale of flows, market structure and the absorption capacity of alternative assets.
The relevant debate is not about announcing the end of the dollar, but about tracking the indicators that would signal a regime shift: the composition of Treasury buyers, the evolution of the term premium, the rise of reserves in alternative currencies and the effective depth of non-U.S. markets.
It is a matter of thresholds, velocity and structure.
In other words: not a prophecy, but an open empirical problem.
This article was written byMichel Santiand was first seen onmichelsanti.fr.
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