The Decline and Fall of the Dollar Empire?

How Ancient Rome’s debasement echoes today – and whether the yuan is ready to take over

If you’ve followed financial news lately, you’ve seen the headlines: “De-dollarization is coming.” “BRICS launch new currency.” “Saudi Arabia accepts yuan for oil.” Most of it is hype. But beneath the noise lies a genuine anxiety – one that economic historian Barry Eichengreen recently framed in a remarkable way.

Writing in an imagined April 2026 op‑ed, Eichengreen draws a straight line from Nero’s Rome to Trump’s America. The Roman denarius was the first true international currency – stable for 300 years, accepted from Britain to the Silk Road. Then came a populist emperor, fiscal desperation, and debasement. Within two centuries, the denarius was worthless.

Sound familiar? It should. But before we declare the dollar dead, we need to separate history from clickbait – and ask whether China’s yuan is a genuine parallel currency or just a sideshow.

What Eichengreen gets right (and what he stretches)

Let’s fact‑check the Roman story first. Eichengreen is on solid ground: the denarius was indeed stable for roughly 300 years, with Augustus minting a coin of about 95–98% silver fineness. Then came Nero. In AD 64, the silver content was reduced significantly, and again in AD 194, marking a watershed in hoard composition and public reaction. Nero reduced the denarius to 1/96th of the pound, alloying its silver with 5–10% base metal. By the reign of Septimius Severus (AD 193–211), fineness had dropped to only 50%.

Nero’s debasement was real: he needed money to reconstruct Rome after the Great Fire (AD 64), build his extravagant Domus Aurea palace, and prosecute costly wars. The denarius never recovered.

Where Eichengreen gets slippery is the modern parallel. The U.S. hasn’t debased the dollar – inflation is not hyperinflation. The Federal Reserve remains (for now) institutionally independent. And while China overtook the U.S. as the world’s largest trading nation years ago, the dollar still dominates:

· 56.32% of global reserves as of Q2 2025 (down from 57.79% in Q1, though most of the decline was due to exchange‑rate effects, not active divestment).
· 88% of all foreign exchange transactions.
· Roughly half of global trade still invoiced in dollars.

As Eichengreen himself has long argued, the dollar’s “exorbitant privilege” is real – but it is not guaranteed to last forever. The greenback’s fate, he warns, hinges not on China’s actions but on U.S. policy decisions, including fiscal discipline and the preservation of institutional credibility.

So the Roman analogy is a cautionary tale, not a prophecy. But it raises the right question: If not the dollar, then what?

Enter the yuan: a parallel system, not a rival

The Chinese renminbi (RMB) is often cast as the dollar’s natural successor. The reality is more modest – but not trivial.

1. Reserve currency status (still tiny)

As of Q2 2025, the yuan accounts for roughly 2.12% of allocated global reserves – a share that has barely moved in a decade. It ranks fifth behind the dollar, euro, yen, and pound. Some analysts project that if U.S. policy uncertainty deepens, the yuan could reach 10% of global reserves in the medium term. But that remains a projection, not a reality.

2. Trade settlement (growing, but gated)

In global payments via SWIFT, the yuan reached 3.13% in January 2026, ranking fifth – up from 2.42% when excluding the eurozone. By February 2026, its share had eased back to 2.74%, ranking sixth. These are incremental gains, not a revolution.

However, China has built an alternative – CIPS (Cross‑Border Interbank Payment System). In March 2026, CIPS averaged 920 billion yuan ($135 billion) in daily transaction volume, and on one day in April 2026, it briefly hit 1.22 trillion yuan. CIPS is now a genuine parallel track that bypasses SWIFT – but it remains a China‑centric system, not a global public good.

3. Bilateral swaps and the “petroyuan”

China has signed bilateral currency swap agreements with nearly 40 central banks. These allow trade partners to settle directly in yuan without needing dollars as an intermediary. In the energy sector, 90% of Sino‑Russian trade was settled in yuan and rubles by 2024, and the petroyuan settlement system now processes about 12% of Beijing’s oil imports. But the petrodollar system remains overwhelmingly dominant, and the yuan’s share of global commodity settlement is still a rounding error.

4. The digital yuan (e‑CNY) and Project mBridge

This is where China is most innovative. The e‑CNY was upgraded in early 2026 to become interest‑bearing – a genuine store of value. More importantly, Project mBridge – a multi‑CBDC platform linking China, Hong Kong, Thailand, the UAE, and Saudi Arabia – processed over $55 billion in cross‑border volume by November 2025, a 2,500‑fold surge from its 2022 pilot levels. The digital yuan accounted for over 95% of settlement volume. This is a working prototype of a dollar‑free trade settlement system.

So is the yuan a “parallel world currency”?

Yes – but with two crucial caveats.

First, the yuan is not freely convertible. China maintains capital controls. You cannot move billions in and out of Shanghai like you can in New York or London. As scholars have noted, capital account controls deter reserve managers who prioritize liquidity, stability, and open markets. That alone disqualifies the yuan from being a true rival to the dollar.

Second, the yuan’s rise is a story of subtraction, not addition. Many countries – Russia, Iran, Venezuela, parts of Africa – are using the yuan because the dollar has been weaponized via sanctions. As a recent study in International Organization (Cambridge University Press) argues, the actions of the second Trump administration pose a serious threat to dollar dominance, eroding global trust and forcing states and private actors to reconsider their reliance on the dollar – but no alternative can yet replace it. The result, the authors argue, is a “financial interregnum” – a fragmented, multipolar financial order where rising powers seek autonomy without assuming hegemonic responsibility.

And those threats to Fed independence are real. In early 2026, the Trump administration launched attacks on Federal Reserve Chair Jerome Powell, including the weaponization of the Department of Justice to pursue baseless investigations. As economist Kenneth Rogoff warned at Davos 2026, sustained political pressure on the Fed risks eroding institutional credibility, reshaping decision‑making at the central bank even without formal changes to its mandate.

The bottom line: Rome fell slowly, and so might the dollar

Eichengreen’s essay is valuable because it reminds us that international currencies are political, not just economic. Nero didn’t destroy the denarius overnight – he eroded trust over decades. The U.S. today shows symptoms: a president who attacks the Fed, rising debt, institutionalized corruption, and trade wars that push rivals together.

But the dollar has no single successor. The future is likely fragmented: a dollar still dominant, a euro holding on, a yuan serving as a regional and sanctioned‑economy currency, and maybe a digital IMF unit or gold on the edges. As Eichengreen himself has written, there is room for several currencies to share the international role – what was true in the distant past will be true again.

So read Eichengreen for the history. Watch the yuan for the experiment. But don’t short the dollar just yet – empires take a long time to fall.