U.S. Dollar Hegemony Isn’t Going Anywhere

U.S. Dollar Hegemony Isn’t Going Anywhere
A Pakistani money trader checks $100 bills at a currency exchange office, Karachi, Pakistan, May 19, 2022 (AP photo by Fareed Khan).

The global economy is being battered these days by the fallout from war, disease and great-power competition. This is bad news for global trade, and some even wonder if it will also dramatically shake up a pillar of the global financial system: the U.S. dollar’s status as the world’s “reserve currency,” meaning its position as the currency most widely held by foreign governments and used in international financial and trade transactions.

Early in Russia’s war against Ukraine, some believed the comprehensive nature of the economic sanctions that were quickly slapped on Russia held the potential to accelerate the dollar’s decline. Because the sanctions are primarily and nearly exclusively being imposed by Western economies, the fear is that they could cause the global economy to bifurcate. Indeed, cut off from the Western financial and economic system, Russia has sought alternative economic outlets, primarily China, with China’s currency—the yuan—having supplanted the dollar as the most widely traded currency on the Moscow currency exchange. Similarly, by observing the West’s ability to essentially weaponize Russia’s dependence on their economies, countries like China could seek to decouple from those economies, while also seeking to establish alternatives to the dollar as the dominant global reserve and trade currency.

But such efforts do not portend a twilight for the dollar’s global dominance as a medium of exchange. Far from an impending fracturing of the global financial system into a dollar system and a nondollar-based system, we are likely to see so-called dollar hegemony continue for some time into the future.

Keep reading for free!

Get instant access to the rest of this article by submitting your email address below. You'll also get access to three articles of your choice each month and our free newsletter:

Or, Subscribe now to get full access.

Already a subscriber? Log in here .

What you’ll get with an All-Access subscription to World Politics Review:

A WPR subscription is like no other resource — it’s like having a personal curator and expert analyst of global affairs news. Subscribe now, and you’ll get:

  • Immediate and instant access to WPR’s fully searchable library of 16,000+ articles
  • Daily articles with original analysis, written by leading topic experts, delivered to you every weekday
  • Weekly in-depth reports on important issues and countries
  • Daily links to must-read news and analysis from top sources around the globe, curated by our keen-eyed team of editors
  • The Weekly Wrap-Up email, with highlights of the week’s most important coverage, and what’s to come.
  • Completely ad-free reading.

And all of this is available to you when you subscribe today.

More World Politics Review