The Importance of the US Dollar, and the Pillar Behind It: What SWIFT Is and Why It Matters to a Malaysian Trader (2026)

Gold is priced in dollars. Oil is priced in dollars. The NASDAQ, the ringgit’s exchange rate, the interest on Malaysia’s foreign borrowing, the fee your broker charges, all of it is quoted in or against the dollar. Everyone knows the dollar matters. Far fewer people know why it keeps mattering, and almost nobody outside banking can name the pillar that holds it up: a cooperative in Belgium that moves no money at all.

This article explains what gives the dollar its position, what SWIFT actually is and is not, why the two depend on each other, where the cracks are, and why a trader in Kuala Lumpur who never sends a wire should still understand it.

📌 Key points

• The dollar is on one side of roughly 88% of all currency trades, carries about half of global payments by value, and makes up about 57% of central-bank reserves. No other currency is close; the euro is second at about a fifth of reserves, and China’s yuan is around 2% to 3%.
• SWIFT is the messaging network banks use to instruct each other. It carries the instructions for most cross-border payments, but it does not hold or move money. The money moves through accounts banks keep with each other and, for dollars, through the US banking system.
• The dollar and SWIFT reinforce each other: dollar payments need the network, and the network’s reach makes dollar payments easy. Cutting a country off, as happened to some Russian banks in 2022, works because of both.
• Alternatives exist, China’s CIPS above all, and the dollar’s reserve share has drifted down for two decades. The drift is slow; the dominance is intact.
• For a trader, the dollar’s role is why US rates, the dollar index and Fed decisions reach gold, the indices and the ringgit within minutes.

Why the dollar is the pricing currency of the world

Three reasons, and they lock together.

It is what everyone else accepts. A Malaysian exporter selling palm oil to India invoices in dollars, because the buyer can get dollars and the seller can use them anywhere. The dollar is the common language of trade, which is why about half of global payments by value, in the latest SWIFT tracker, are in dollars, and the euro is a distant second.

It is what central banks hold. Bank Negara, like every central bank, keeps reserves to defend the currency and pay for imports in a crisis. The IMF’s count for the second quarter of 2026 puts the dollar at 56.7% of the world’s US$13.2 trillion of reserves, the euro at 20.6%, and the yuan at 2.1%. Reserves are held in dollars because dollar assets, above all US Treasuries, are the deepest and most liquid in existence.

It is what everything is quoted in. Gold, oil, copper, the price of a container from Port Klang to Rotterdam, the interest rate on a Malaysian company’s foreign loan. Once a thing is priced in dollars, the people who trade it need dollars, which deepens the market, which keeps it priced in dollars. The BIS’s last survey found the dollar on one side of about 88% of all foreign exchange trades.

Each reason makes the others stronger. That is the dominance, and it is why a decision at the Fed in Washington moves a gold chart in Kuala Lumpur at 2 am.

What SWIFT is, and what it is not

SWIFT, the Society for Worldwide Interbank Financial Telecommunication, was set up in 1973 by banks that were tired of telex. It is a cooperative, owned by its member banks, based near Brussels, connecting more than 11,000 financial institutions in over 200 countries and territories. It carries tens of millions of messages a day.

What it does is narrow and essential. When your bank sends money abroad, it sends a message through SWIFT, in a standard format, telling the receiving bank what to pay, to whom, and from which account. SWIFT guarantees the message is secure, authentic and delivered. That is all.

What it does not do matters just as much. SWIFT holds no money and moves no money. The money moves through accounts banks keep with each other, called correspondent accounts, and, when the currency is the dollar, ultimately through the US payment systems that clear dollars. SWIFT is the postal service, not the vault. A dollar payment from Kuala Lumpur to São Paulo might hop through a bank in New York, which is why US law reaches so many payments that never touch an American buyer or seller.

	SWIFT	Correspondent banks	Dollar clearing in the US
Role	Sends the instruction	Hold the accounts the money moves between	Final settlement of dollar payments
Holds money	No	Yes	Yes
Who controls it	Member-bank cooperative, Belgian law	Each bank	US Federal Reserve and US banks, US law
What happens if you are cut off	Your banks cannot send or receive standard instructions	Your accounts can be frozen	You cannot settle in dollars at all

Why the dollar and SWIFT need each other

The dollar is the currency most payments are made in; SWIFT is the network most payment instructions travel on; the dollar’s clearing runs through New York. Pull one and the others wobble.

That is why disconnecting a country from SWIFT is such a heavy tool. When selected Russian banks were removed from the network in 2022, the practical effect was not that Russia lost access to a messaging app. It was that routine dollar and euro payments, the ones that keep exports and imports moving, became slow, expensive or impossible, because the correspondent chain had nowhere to run. The same mechanism has been used against Iran. The threat of it is part of what the dollar’s dominance means.

For an ordinary Malaysian company the system is invisible and works well. A dollar invoice is settled in a day or two through SWIFT’s faster gpi service, often within minutes. The pillar only becomes visible when someone is denied it.

Where the cracks are

The dollar’s share of reserves was above 70% at the turn of the century and is about 57% now, so the drift is real. It is also slow, and it has gone mostly to smaller currencies rather than to any single rival. The candidates:

• China’s CIPS (Cross-Border Interbank Payment System) clears yuan payments without SWIFT and has grown fast, but the yuan is still about 3% of global payments and 2% of reserves, and China’s capital controls limit how much of it foreigners can hold.
• Central-bank digital currency projects for cross-border settlement, such as the mBridge platform involving China, Hong Kong, Thailand and the UAE, aim to bypass correspondent banks entirely. They are real, small, and years from scale.
• Stablecoins, dollar tokens on public blockchains, move dollars outside the correspondent chain. Their payment volume has grown sharply, and they are, ironically, dollars: they extend the dollar’s reach rather than replace it. Our companion article on crypto and SWIFT covers them.
• Gold. Central banks have bought record amounts in recent years, partly to hold a reserve that no one can freeze. That buying is one reason gold set records in 2025 and early 2026.

None of this ends the dollar’s position in the next decade. All of it explains why the question is asked more loudly every year.

Why a Malaysian trader should care

You never send a wire for a trade. The dollar’s structure still sets the terms of every chart you watch.

• Gold is a dollar price. The ringgit price of gold moves with the dollar even when gold is flat. A Fed decision that lifts the dollar lowers gold, and the chain runs through the dollar’s role as the pricing currency.
• The ringgit is a dollar pair. USD/MYR responds to US rates and dollar flows more than to anything in Putrajaya on most days, because the dollar is what global money moves in and out of.
• The indices are dollar assets. Foreign money entering or leaving US stocks is dollar money, which is why the dollar index and the NASDAQ often move in a pattern.
• Sanctions and reserve shifts are gold stories. Every time a central bank decides it wants a reserve that cannot be cut off, gold catches a bid. The pillar’s cracks are a reason to understand gold, not a reason to bet on the dollar’s collapse.
• The news is priced through this system. Understanding why the dollar is the hub is part of the Understand stage: knowing what moves your market before you trade it.

FAQ

What is SWIFT in banking?

A bank-owned messaging network, founded in 1973 and based in Belgium, that carries standardised payment instructions between more than 11,000 institutions. It does not hold or move money; it tells banks what to move.

Why is the US dollar the world’s reserve currency?

Because it is the currency most trade is invoiced in, the currency with the deepest financial markets, and therefore the currency central banks hold. Each of those reinforces the others. It carries about half of global payments and 57% of reserves.

Can a country be cut off from SWIFT?

Yes. Selected Russian banks were disconnected in 2022, and Iranian banks before that. The effect is that routine cross-border payments become slow or impossible, because the correspondent chain cannot run.

Is the dollar losing its dominance?

Its reserve share has drifted from above 70% to about 57% over two decades, mostly to smaller currencies. The yuan is at about 2% of reserves. The drift is real and slow; the dominance remains.

What is CIPS?

China’s Cross-Border Interbank Payment System, which clears yuan payments without relying on SWIFT or dollar correspondent banks. It is growing, but the yuan’s share of global payments is still about 3%.

Summary

The dollar is the world’s pricing currency because trade is invoiced in it, markets are deepest in it and central banks therefore hold it: about half of global payments and 57% of reserves. The pillar behind that is a Belgian bank cooperative, SWIFT, which carries the instructions for most cross-border payments but holds no money; the money moves through correspondent accounts and, for dollars, through New York, which is why cutting a country off works. Alternatives, CIPS, central-bank digital platforms, stablecoins and gold, are real and small. For a trader, the dollar’s role is the reason Fed decisions reach gold, the ringgit and the indices within minutes.

Disclaimer

This article is education, not financial advice. Figures are from SWIFT, the IMF and the BIS as published at the time of writing and will change. Trading leveraged products carries a high risk of losing money, and most retail traders lose. Traderpreneur Xcellence Sdn Bhd is a trading education provider and does not provide investment advice, trading signals or account management.

Related reading

• Cryptocurrency vs SWIFT: Why Decentralised?
• What Is the Fed, and How Does It Move Markets?
• Nominal vs Real Interest Rates
• Why most Malaysians lose money trading gold
• Global Index Mastery · U.S.D Trader Camp
• 中文版 Chinese version: 美元为什么重要，背后的支柱是什么：SWIFT