Washington is losing its clout. Its allies in Europe - the UK, Germany, France and Italy - have applied to become members of the China-led Asia Infrastructure Investment Bank (AIIB), defying US calls for them to exercise caution.
The institution is seen as a rival to the World Bank and the Asian Development Bank.
Once the AIIB gets off the ground, it will become an international financial institution to be reckoned with, offering financing for infrastructure projects in yuan-denominated loans.
This is the underlying reason for Washington's concern over the creation of the AIIB. Allowing the yuan to flourish will hit the international standing of the US dollar as the world's reserve currency of choice.
China, Russia and other BRICS countries are moving away from the dollar, preferring to trade among themselves in their own currencies.
Not only will this reduce foreign exchange risks associated with the dollar, it will also promote the use of their own currencies.
Washington cannot afford to let a new international foreign exchange regime come into being.
With a budget deficit of $1 trillion (S$1.4 trillion) a year, the US needs to finance its debt with borrowing. If the dollar's credibility is questionable, fewer and fewer countries and funds will be willing to become the US's creditors by buying up US bonds.
The dollar will be dumped. Interest rates will rise, hurting the economy and the financial markets. The chain reaction will bring another round of financial crisis.
The AIIB was created in October last year from founding members China, India, Thailand, Malaysia, Singapore, the Philippines, Pakistan, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, Myanmar, Mongolia, Nepal, Oman, Qatar, Sri Lanka, Uzbekistan and Vietnam.
China stated that it would hold a 50 per cent stake in the institution by pitching in $50 billion. The remaining $50 billion would come from the other countries - 50 per cent from ASEAN countries.
The US sought to torpedo the AIIB from the outset. Washington officials came out to caution that the AIIB's lending practice might not meet governance or environment standards.
But that was merely a ruse to scare off countries from joining the AIIB amid fear that the US was about to lose its power over global finance.
China has good reasons to set up the AIIB. Along with other emerging market countries, it has been calling for a greater role in international financial institutions such as the IMF.
The IMF is undergoing reform to allow a greater role for other emerging market economies. Many countries agree with this move, but not the US. It should be noted that the combined GDP of the developing countries now equals that of their developed counterparts.
As such, there is no justification for the US or the EU to maintain their veto privilege in the international institutions.
The US Congress in December last year failed to pass a law that would have increased the capital for the IMF and reformed the institution.
This upset the Chinese, who were looking forward to increasing their quota representation in the IMF and adding the yuan to the IMF's basket of currencies.
The Chinese economy is now second in size only to the US. In terms of purchasing power parity it is larger. So with this new status, China naturally wants to play a greater role in the international arena. But all along, the US has sought to block Beijing's role.
Now, however, we have come to a point where the US can no longer dictate global events on its own terms. The fact that its allies are deserting to join the AIIB reflects the waning of Washington's influence.
Its allies realise they will miss the boat if they fail to join the AIIB, because the growth opportunities are in Asia - not in Europe or the US, where structural problems have yet to be addressed.
The US has the option of either staying out of the AIIB or of applying for membership. But whatever choice it makes, it won't prevent China from playing its yuan card in a big way.