The Dollar Still Rules, But US Policy Is Making It Less Special
America will have less geopolitical and economic leverage if investors and central banks hold more kinds of currency.
Photo illustration: Mark Harris for Bloomberg Markets; photos: Getty Images (3)
President Donald Trump’s push to redesign the global economic order in favor of the US is shaking one of the foundations of its post-World War II supremacy: the dollar’s undisputed role as the world’s reserve currency.
It’s a status that shows the dollar is used in roughly nine out of 10 foreign exchange transactions and about half of all merchandise trade conducted globally, and is making up almost 60% of reserves held by governments around the world. That dominance helps Washington to run gaping budget deficits and US consumers to spend more than they make—all funded by overseas investors eager to snap up assets denominated in greenbacks adorned with the motto “In God We Trust.”