A US debt default could hit on Thursday, and world leaders are second guessing the dominant role America plays in finance. Regardless of the final decision in Washington, confidence and credibility in the US has already eroded.
In an editorial published by the Chinese state-owned press agency Xinhua, a columnist says the US economy has "failed" and put many countries who hold state assets in dollars at risk.
"To that end, several corner stones should be laid to underpin a de-Americanized world," the editorial read.
Last week China, the biggest US creditor, started to make preparations for a technical default on loans. The European Central Bank and the People's Bank of China (PBC) have agreed to start supplying each other with their currencies, avoiding the dollar as an intermediary currency. The currency swap agreement will last for three years and provide a maximum of 350 billion yuan ($56 billion) to the ECB and 45 billion euro ($60.8 billion) to the PBC.
In a further sign of growing distrust, China introduced a so-called "haircut," or a discount, on the value of US Treasuries held as collateral against futures trades.
Developing and developed nations are equally concerned, and institutions like the World Bank and the International Monetary Fund (IMF) have issued several warnings.
Christine LaGarde, managing director of the IMF told the US they must uphold their financial promises to the international community and raise their debt ceiling. Failing to do so would put the world "at risk of tipping yet again into a recession," LaGarde said in an interview on NBC's "Meet the Press," which aired on October 13.
"You have to honor your signature ... give certainty to the rest of the world," LaGarde urged the US, a strong supporter of the international lending tool.
The country that has long provided a sturdy backbone to the global economy is now teetering on a mass default. If US lawmakers don't forge a solution to raising the debt ceiling by October 17, investors with US treasury bonds, one of the lowest-risk assets, could suffer.
"It's not just China that's at the mercy of US lawmakers, its everybody in the world that is at the mercy of US lawmakers right now," David Kuo, Investment Advisor at Motley Fool, told RT.
"China is trying to diversify away from US Treasuries," said Kuo, adding investors "cannot just assume an asset is 100 percent safe."
China holds nearly $1.3 trillion in Treasuries, Japan has $1.14 trillion, and other big foreign creditors include Caribbean creditors, Brazil, Taiwan, Russia, and European nations.
Other creditors have decided to keep calm.
Russia, ranked the 11th on the list of the US top creditors with the estimated $132 billion in US Treasuries, plans to keep their Treasuries.
"I don't see the need for revising our reserve investment strategy in US Treasuries," Russian Finance Minister Anton Siluanov said at a press conference on October 11 following a meeting of the G20 finance and Central Bank chiefs.
"What's happening now, I hope, is a fairly short-term situation," Siluanov told reporters, noting Russia's investment plan is long-term.