Why It’s So Hard to Overthrow the Mighty U.S. Dollar

As the coronavirus outbreak reached pandemic status, people began panic buying staples: rice, pasta, noodles — and the U.S. dollar. The demand was so intense that the U.S. Federal Reserve stepped in to help foreign central banks and others get their hands on the greenback in March. It was a similar situation as during the 2008-2009 financial crisis, when calls grew louder for an end to the global dominance of a single currency. Yet, just over a decade on, the dollar still reigns supreme.

Because of its sheer prevalence. The U.S. currency is on one side of almost 90% of foreign-exchange transactions and accounts for two-thirds of international debt. Virtually all international trades in oil are priced in dollars. Jean-Claude Juncker, the former president of the European Commission, said it was “absurd” that 80% of Europe’s energy imports are priced in dollars. The greenback’s ubiquity makes nations beholden to fluctuations in its value, ties their economies to decisions made in Washington and serves to amplify dangerous shocks to the financial system, like the one triggered by the pandemic.