The dollar has fallen from a peak in 2022 and has rebound from loses earlier in the year, but the talk of dedollarization have continued given the rhetoric from other countries.
The BRICS have begun to have discussion on a new common currency to avoid dollar dependence, but there is a long way to go for anything to become operational. China as the major economic and trading partner around the globe is at odds with the US and would like to see greater Renminbi usage as a dollar substitute but this is unlikely without full convertibility. Investors need to know that they can freely trade their currency exposures.
The dollar dominance ultimately is the choice of the US. However, this does not mean the US will take the steps necessary for continued dominance. Dollar dominance is a US policy choice on how it would like to act with other countries, the choice of monetary policy, and the choice of fiscal deficits.
Those who have studied currency dominance like the economist Barry Eichengreen believe that the dollar did not take dominance from sterling but was more likely given its dominance position because British sterling was not able to maintain its stability. The US was the dominate economy after WWI, but sterling was supported to maintain its dominance at the expense of the internal economy. WWII caused a second wave of British deficits, but this time the government decided not to protect sterling. It could not without suffering domestic turmoil. Hence, the US was the only major currency for finance.
The dominance was baked into the Bretton Woods Agreement despite the best efforts of Keynes to find a different alternative. The combination of two world war against a smaller economy that needed to run huge deficits caused a change currency dominance which could not be stopped. Dollar dominance inevitable given the size of the US economy but choices were made which sealed the fate of the sterling and the dollar.
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