This article analyses the implications of the establishment of the US dollar as the global reserve currency. The political and economic context of the founding of the dollar as the reserve currency is examined, and key changes that have occurred since the dollar was installed as the global reserve currency are explored. Challenges to the future of the dollar as the global reserve are analysed. The article argues that the dollar as the global reserve currency is an instrument of US hegemonic power, but it is one that has been largely overlooked in the existing literature on US hegemony.
Since World War Two, the United States dollar became and remains the global reserve currency. This status in international trade and investment has given the US the ability to exercise hegemonic power around the world. In recent years, there have been attempts by competitor nations notably China, Russia, and Iran to replace the dollar's exclusivity in bilateral trade. Their intention is to undermine the ability of the US to continue as the world's hegemon. It is argued that this outcome is unlikely to be achieved in the near term, because of the continuing reliance on the US dollar.
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