The Eighty-Year Global Financial Dominance of the Dollar and the Power Behind It

The absolute dominance of the US dollar in the global financial system for nearly eighty years is discussed in the light of three newly published books, framed by economic dynamics and geopolitical developments.

The Global Dominance of the Dollar

The American dollar has continued to steer the global financial system for nearly eighty years, providing the US with significant economic privileges. While billions of banknotes are in circulation, the true power stems from trillions of dollars in official institutional reserves and the fact that international trade revolves around this currency.

Tracing its historical origins back to the sixteenth century, the currency maintained its status as a safe haven even though it experienced brief fluctuations influenced by certain policies during the Donald Trump era.

Search for Alternatives and Expert Opinions

Harvard economist Kenneth Rogoff emphasizes that factors such as the high liquidity, market size, and rule of law offered by US Treasury bonds prevent the emergence of a strong alternative. Even during periods when crises are centered in the US, investors' money flows toward the dollar.

While Paul Blustein argues that the dollar will remain the primary reserve currency for the foreseeable future, Kenneth Rogoff draws attention to the possibility that the Pax Dollar order could be shaken in the future.