The US dollar’s dominance remains virtually unchallenged

The size of the US economy, the depth of the capital market, the free convertibility of the currency and the trust placed in US institutions have helped the US dollar defend its position as a global reserve currency even after the end of Bretton Woods. To be sure, the share of currency reserves denominated in US dollars has fallen in the past decades, but at now roughly 60% the greenback continues to clearly assert its dominant position. In response to Russia’s war of aggression against Ukraine, the dollar’s dominance has been used as a ‘sanctions weapon’ for the first time in history, a development that will uplift the use of local currencies and alternative payment systems in Asia. But the alternatives to the dollar as a global reserve currency are generally limited. Neither the renminbi nor the euro nor cryptocurrencies will be able to challenge the greenback for the foreseeable future.

The US dollar’s dominance remains virtually unchallenged(PDF, 235 KB, accessible)