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The Next Global Reserve Currency
What will the future look like without the USD at the heart of the global economy?
Our world is slowly moving away from the U.S. dollar (USD) as the global reserve currency, towards something else. Will it be replaced by the Chinese yuan? The Euro? Bitcoin? ETH? Or a currency that doesn’t even exist yet?
Why does it even matter that the global reserve currency happens to be the USD? Isn’t it just some arbitrary baseline that we use to compare currencies from different countries?
With the USD as the global reserve currency, the United States has two key advantages over all other countries: (1) it has the sole authority create more money, and (2) it has the final authority to block or approve financial transactions.
“Any wire transaction that takes place in the world involving U.S. dollars is at some point cleared through a U.S. bank,” explains Dmitry Dolgin, ING Bank’s chief economist for Russia. “That means that the U.S. government can tell that bank to freeze certain transactions.” (Source: Nikkei Asian Review)
