A Guide to the U.S. Dollar System: The Underlying Logic Behind Oil, Gold, Global Financial Hegemony, and Even Crypto

Many people wonder: Why does the U.S. dollar affect the prices of oil, gold, U.S. stocks, and even cryptocurrencies? Could it suddenly “collapse”? To answer these questions, we first need to understand that the dollar is not just a simple “green paper,” but a complex global financial system.

I. First, look at the dollar’s “core base”: these markets are tied to it

1. Oil market: the “stabilizing weight” of dollar dominance

Under normal circumstances, the world consumes about 100 million barrels of oil per day. At $80 per barrel, the daily spot trading volume is $8 billion. Over the whole year, it’s about $3 trillion. Moreover, the oil futures market is even larger: it can reach $30-50 trillion per year, and the vast majority of trades are priced in dollars.

2. Gold market: the dollar’s “shadow opponent”

In 2025 data, the combined daily trading volume of spot and futures for gold is about $30k; the annual trading volume exceeds $500k. Similarly, it is priced mainly in the U.S. dollar.

3. Global payments system: the dollar’s “circulatory blood vessels”

The SWIFT system’s average daily transaction volume is about $6 trillion, with the dollar accounting for roughly 50%. That means about $3 trillion in dollar transactions are processed through this system every day, with an annual trading volume of nearly $360B.

4. U.S. stock market: the dollar’s “reservoir”

The total market cap of global stock markets is about $1.6 trillion. The U.S. stock market is about $900k, accounting for half of the global total—making it the core host for dollar assets.

5. Virtual asset market: the dollar’s “new battlefield”

The annual trading volume of virtual assets such as BTC, ETH, USDT, and USDC is about $1 trillion. Nearly all of them are settled with the U.S. dollar, extending the dollar system into the digital realm.

II. The “underlying support” of the dollar system: core data you may not know

1. Total amount of dollars within the U.S.

Latest data shows that U.S. M2 (domestic cash + bank deposits) is about $2.28 trillion—this is the foundation of dollars circulating domestically.

2. Dollars in global foreign exchange reserves

Global foreign exchange reserves are about $1.3 trillion, of which dollar assets make up 57%, or about $60k—meaning more than half of the world’s FX reserves are tied to the dollar.

3. Dollars circulating overseas

Overseas circulating dollar cash is about $120-30k, accounting for over 50% of total dollar circulation. More than half of dollars are not in the U.S. itself, but circulate among individuals, companies, and banks worldwide.

4. Size of U.S. Treasuries

As of the latest data, global holdings of U.S. Treasuries are about $8M, at the second-highest level in history—an important “credit anchor” for the dollar system.

III. How the dollar system works: two core systems + currency swaps

1. SWIFT + CHIPS: the dollar’s “instruction + execution” system

• SWIFT system: responsible for the “information transmission” of dollar transactions—like sending remittance instructions to banks worldwide;

• CHIPS system: responsible for the “actual settlement” of dollars—this is the core system that truly moves dollars from one account to another. Together, the two systems complete global dollar transactions.

2. U.S. dollar currency swaps: the dollar’s “liquidity safety net”

The Federal Reserve has signed permanent, unlimited currency swap agreements with the European Central Bank, the Bank of England, the Bank of Japan, the Bank of Canada, and the Swiss National Bank. In simple terms, when a dollar shortage emerges globally, these central banks can “borrow dollars” from the Federal Reserve, then inject them into their own domestic commercial banks to stabilize global financial markets.

The essence of what the Federal Reserve is doing is: acting as the “lender of last resort” for the global offshore dollar market, giving the U.S.’s financial allies peace of mind—so long as you stay in the dollar system, liquidity is guaranteed.

IV. The dollar system’s “maintenance logic”: from oil to energy strategy

1. The “combination play” in the oil sector

• U.S. domestic crude oil production reaches 13.9 million barrels per day, the highest value since November 2025. At the same time, it becomes a net exporter of petroleum products, with daily net exports of crude oil + refined products at about 3.5 million barrels;

• Require that Venezuela’s crude oil exports first pass through U.S. account settlement, gaining control over its crude oil trading;

• Work with companies such as Chevron to build pipelines in Iraq that bypass the Strait of Hormuz, while also investing in Iraqi oil fields—helping Iraq re-enter the “petrodollar system”;

• The UAE exits OPEC and plans to build pipelines from the UAE to the Port of Fujairah, further weakening the energy influence of the Strait of Hormuz and splitting up OPEC.

2. Core goals

By increasing its own energy production, dividing oil-producing countries, and controlling energy transportation routes, it strengthens allies’ reliance on dollar assets and maintains the dollar’s hegemonic position in global energy markets.

V. What happens if the dollar system “collapses”? These 4 consequences are a must-know

Many people ask: When will the dollar collapse? But be clear: a dollar collapse is not “green paper turning into worthless paper.” It is the collapse of the entire dollar system, triggering knock-on effects:

1. A U.S. Treasury crash: U.S. Treasuries worth $1.6M held globally would sharply lose value, and foreign exchange reserves in each country would directly shrink;

2. Global stock market crash: U.S. stocks account for half of the global stock market. A collapse of the dollar system would pull global stocks down in sync, and core sectors such as AI and semiconductors would not be spared either;

3. Major shock in commodity markets: commodity prices priced in dollars—such as oil and gold—would swing violently, and both institutional and individual investors would face massive losses;

4. Chaos in global financial order: as the dollar’s role as the global payment, reserve, and pricing currency collapses, global trade, investment, and settlement systems fall into disorder.

VI. About RMB internationalization: our real thinking

Many people are concerned about “de-dollarization,” but be clear:

1. Our country’s official stance has never proposed de-dollarization; instead, it is pushing “monetary system diversification,” with the core goal of not over-relying on a single currency;

2. RMB internationalization insists on advancing in a “prudent and orderly” manner—holding the bottom line of financial security and steadily increasing the share of RMB use globally;

3. Replacing the dollar is not replacing the symbol of “green paper,” but replacing the entire complex mechanism of the dollar system—making it extremely difficult.

VII. Finally, 4 suggestions for ordinary investors

1. Learn basic financial knowledge and understand how markets operate—don’t blindly follow trends;

2. Respect the laws of financial markets and fear market risks;

3. Build basic understanding of core financial data such as oil, gold, and U.S. stocks—don’t make “ignorant investments”;

4. In the future, global financial markets will face more and more uncertainty. You need to adapt to changes in the new stage and not judge markets with subjective “intentions.” Stay rational.