The United States has the most widely used currency in the world, known as the US dollar - the country's greatest economic weapon. After nearly 80 years of dollar supremacy, the States might be in danger of losing its “global reserve currency" status. Nearly 60% of the total global currency reserves are held in American dollars, giving the US a great advantage over other countries. Some of these benefits are that the US government debt is backed by the dollar itself, and the US gets to borrow from other countries in its own currency - thus, if the dollar loses value, so does the debt. In case the country loses these benefits, its economy would be heavily impacted.
The USA detonated its economic weapon on Russia after the nation invaded Ukraine by barring the country from tapping into a 630 billion dollars reserve. While this may be an efficient tactic to assist in certain situations, it comes with a grand cost. A new research paper by the International Monetary Fund discovered that the dollar share of international reserves has been decreasing for the past two decades - which was around the same time that the US began its counter-terror sanctions like the one used against Russia.
Throughout the years, China has been trying to make its currency, the Yuan, more present in the global reserve currencies. As a result, a quarter of all global currency reserves have been changed from the US dollar to the Chinese Yuan. Saudi Arabia, for instance, is in talks with Beijing to accept Yuan instead of dollars for Chinese oil sales. However, at least for now, 40% of global transactions are still made in dollars while only 3% are conducted in Chinese currency.
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