Europe and China Can Only Dream of Rivaling Dollar For Now
Feb 28th 2026
Beijing and Brussels are promoting the yuan and euro, but market liquidity, legal frameworks, capital controls and political fragmentation mean the US dollar remains the primary global currency.
- The US dollar remains the dominant global currency and holds the largest share of official foreign exchange reserves.
- The depth and liquidity of the US Treasury market make dollar assets the primary safe settlement vehicle for global investors and central banks.
- China is actively promoting the yuan and President Xi has called for it to be a global reserve currency, but capital controls and limited convertibility restrict wider use.
- The euro's international role is constrained by political and fiscal fragmentation inside the EU and by the lack of a common fiscal backstop.
- Recent policy pushes and payment system initiatives from Beijing and Brussels signal intent to internationalize their currencies but do not overcome the market and structural advantages that keep the dollar dominant.