(Bloomberg) -- All around the world, a backlash is brewing against the hegemony of the US dollar.Most Read from BloombergAmazon Is in Talks to Offer Free Mobile Service to US Prime MembersChina Is Drilling a 10,000-Meter-Deep Hole Into the EarthRich Latin Americans Transform Laid-Back Madrid Into a New MiamiHedge Funds at War for Top Traders Dangle $120 Million PayoutsEverything Apple Plans to Show at WWDC: XR Headset, iOS 17 and MoreBrazil and China recently struck a deal to settle trade in the
Using local currencies is good for the economies themselves, as it gives them autonomy.
However, These governments can weaponize their own currencies too.
So using a 3rd party stable currency to assure value over time and that neither party could manipulate the value makes sense.
Also, a lot of economies carrying a stake in each others currency will make going to war more costly (for everyone), meaning that it might serve as a stabilizing factor. I cannot imagine the Yuan replacing the dollar, as China will not hesitate to weaponize it if it suits them.
It’ll trigger the shit out of conservatives, but if a world reserve currency is desired, why doesn’t the UN start one? At least that way the governance process would be loosely deliberative and all stakeholder countries would have input. Countries could retain their national currencies while still having a convenient medium of international exchange.
There would be no economic power to back up a UN currency, meaning it would be dependent on voluntary participation from the bulk of the member states’ economies, which likely means that it would quickly devolve to either a protest currency used by anti-west regimes, a slightly federated version of the dollar that is responsive to the needs and desires of mainly the US and partially the EU, or it will be dropped/ignored by both the West and the Anti-west and become a currency of minimal value that is used only on the fringes of the world economy. The UN simply does not have the centralized capacity to operate a currency and enforce that currency’s use amongst it’s member states, especially those that already have a hegemony that would be threatened by such a currency
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Largely this doesn’t happen because the US dollar already serves as a good enough reserve currency. There’s always been reserve currencies and unless the US abuses this power too much, there isn’t any real demand for an alternative.
That’s not really how currencies work. They are not just something arbitrary, they are a thing people trade which has value formed by supply and demand. People buy dollars to be able to buy things that are sold in dollars. Same goes for other currencies.
What would be the demand for UN currency? What can you buy with it? How would the price be determined?
The idea that USA somehow hugely benefits from having so much international trade done in dollars is also a bit weak. It does give them some international clout but that’s about it. There are some very complicated things relating to trade balances involved when your currency is the global reserve currency.