Four Reasons Why the Dollar Will Remain the Reserve Currency – Part II

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The media is once again presuming that America's financial negligence will result in the replacement of the dollar as the world's reserve currency. As I wrote in The Dollar’s Death, Not So Fast Part I: "Don't hold your breath. Headlines forecasting the dollar's death as the world's reserve currency have been around for a long time." While the case for a new global reserve currency is strong, the replacement options pale in comparison. There are four important reasons why finding a replacement will prove difficult.

The four reasons, the rule of law, liquid financial markets, and economic and military might, all but guarantee the death of the dollar will not occur anytime soon.

The Dollar’s Death, Not So Fast Part I provided background for the dollar's role as the global reserve currency and the inherent flaws in serving that role. The construct of the dollar is an essential foundation for understanding the it position as the reserve currency.

Aside from those four reasons, 60% of global currency reserves are in dollars, and about 90% of trade occurs in dollars. Further, no other currency or block of nation's currencies, gold-backed currency, or bitcoin is a viable candidate to replace the dollar as the global reserve currency.