The United States dollar has maintained its position as the global dominant currency for several decades. Its impact on international trade, investment, and financing is unparalleled, making it a coveted asset for governments, investors, and central banks. However, changes in the global economy, along with the growth of new economic powers, and emergence of new technologies, have raised questions on whether the US dollar will continue to be the most influential currency, or if emerging currencies such as the Chinese Yuan, or even cryptocurrencies, would impact its dominance.
One of the reasons behind the US dollar’s supremacy is its preference as a currency in most international trade, accounting for nearly 40% of all transactions. This has, in turn, granted the United States considerable influence over global trade and commerce, enabling it to use its position to fight for its interests and challenge countries such as China.
Moreover, the US dollar is the leading reserve currency globally, representing over 60% of global foreign reserves. The status quo has helped stabilize the global economy, allowing countries to use the US dollar as a buffer against economic shocks and guaranteeing the liquidity and stability of international financial markets.