SIPS: China Challenges Dollar Domination

The end of the dollar is not imminent, but its monopoly, with over 58% of global foreign exchange reserves still held in dollars, is already showing cracks.

Since the end of the Second World War, the supremacy of the greenback seemed unshakeable. A universal currency, backed by a global banking system, capable of opening or closing markets with a single click on the SWIFT network.

But the arrogance of domination always generates its own resistance. By instrumentalising the dollar as an economic weapon, through sanctions, embargoes and banking exclusions, Washington has triggered a worldwide counteroffensive. Discreet, methodical, strategic.

At the forefront of this silent resistance: China.

With its Cross-Border Interbank Payment System, SIPS, Beijing is not merely dreaming of monetary emancipation. It is building, stone by stone, a global alternative designed to make the dollar avoidable, and perhaps one day, dispensable.

SWIFT: the spider’s web of American financial power

Created in 1973 to facilitate communication between international banks, the SWIFT network is today the beating heart of global finance.

Every day, this system handles millions of coded messages: payment orders, transaction confirmations, transfer instructions. But SWIFT does not move money itself. It transmits the messages that authorise the movement of funds.

Its strength lies in its universality: more than 11,000 financial institutions across over 200 countries.

Its weakness stems from its Western anchoring: although theoretically neutral, SWIFT remains legally subject to Belgian and European regulations and politically vulnerable to American pressure.

Since the 11 September 2001 attacks, the United States has increasingly used SWIFT as an instrument of control and sanction. Iran, Russia, Venezuela, North Korea: numerous examples where exclusion from SWIFT paralysed entire countries’ access to global markets.

SWIFT has become the economic weapon of the twenty-first century.

Faced with this reality, Beijing drew its own conclusions.

SIPS: China’s monetary weapon

In 2015, the People’s Bank of China launched SIPS, an international payment system designed to operate entirely in yuan.

Unlike SWIFT, which is merely a messaging system, SIPS allows both the instruction and the funds to be sent simultaneously.

A fundamental change.

By controlling the entire transaction chain, China no longer depends on Western networks. Key sectors such as energy, with hydrocarbon transactions involving Russia and Gulf states, and major commodity exchanges like agricultural products with Brazil, are increasingly secured through SIPS agreements, bypassing traditional dollar channels. It can secure its international exchanges, strengthen the credibility of the yuan, and offer its partners an alternative to the monetary blackmail exerted through the dollar.

SIPS is not an isolated project. It forms part of a broader strategy to internationalise the yuan, alongside the creation of trade corridors, bilateral agreements in local currencies, and investment projects detached from the dollar, such as the Belt and Road Initiative.

The digital yuan: the second blade of the Chinese project

Alongside SIPS, China is developing its own digital yuan, the e-CNY.

Its objective is clear: to enable instant international payments without relying on the traditional banking system or Western institutions.

By combining SIPS and the digital yuan, Beijing can theoretically offer a direct, rapid, and sanction-resistant cross-border payment system.

In the future, the digital yuan could allow states, companies, and even individuals to trade directly in yuan, without using dollars or intermediary banks.

This represents a potential paradigm shift for international commerce.

A discreet but real expansion

Today, more than 100 financial institutions across nearly 111 countries are connected to SIPS, a modest figure when compared to SWIFT’s extensive network of over 11,000 institutions worldwide, highlighting both SIPS’s rapid growth and its current limitations.

Most are located in Asia, Africa, Latin America, and among BRICS countries, all seeking greater economic autonomy.

While trade in yuan remains minor, bilateral agreements are multiplying: with Russia for hydrocarbons, with Brazil for agribusiness, with several Gulf states for oil.

Each new dedollarised partnership strengthens the parallel network that China is methodically constructing.

Current limits and obstacles

Despite its progress, SIPS remains a challenger compared to the SWIFT behemoth.

The yuan currently accounts for only about 4% of international transactions, compared to nearly 60% for the dollar.

Furthermore, strict controls imposed by Beijing on its financial markets, and the yuan’s lack of full convertibility, continue to hamper its international attractiveness.

Trust in China’s banking system remains limited. Many trading partners still fear political opacity and risks of interference.

A slow but inevitable shift

Even if the dollar remains dominant, the foundations of its supremacy are gradually eroding.

New generations of bilateral agreements, alternative trade corridors, and the emergence of infrastructures like SIPS signal a future where the dollar will no longer be unavoidable.

In a multipolar world, monetary diversification will become a necessity for many states.

China knows this.

It does not need to eliminate the dollar to succeed. It only needs to offer a credible escape route.

SIPS, coupled with the digital yuan, represents today the most serious attempt to exit the Western monetary order since the end of Bretton Woods. A large-scale shift away from the dollar could weaken the United States’ ability to impose sanctions, destabilise its trade balance, and undermine the geopolitical alliances built around its monetary supremacy.

The currency wars have begun.
They will not make headlines.
But they will silently redraw the maps of global power…

G.S.