Chatham House
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US dollar dominance is both a cause and a consequence of US power
EXPERT COMMENT
Although many countries would like to see an alternative to the US dollar, its dominance is unlikely to come to an end anytime soon.
Mao Zedong was no monetary theorist, but his reflections on power help explain why the dominant role of the US dollar will persist. ‘Power grows through the barrel of a gun’, he said. One could add that currency power does too.
Throughout history, the top global currency has tended to be that of the dominant military power. Sterling ruled when Britain had an empire ‘on which the sun never set’, as did the silver Denarius and gold Aureus when Rome had its time. Currency power is a derivative of national power – and guns count.
But it would be wrong to think that the dominance of the dollar will give way to the renminbi, for instance, simply because China is accumulating power relative to the US.
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Original article link: https://www.chathamhouse.org/2024/09/us-dollar-dominance-both-cause-and-consequence-us-power
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