This question has been repeatedly raised in international economic circles and by those interested in the US currency: Can the US dollar’s appeal as a reserve currency in international transactions last forever?
Some research centers agree that the US dollar era is unlikely to end overnight. But they also point out that efforts by some countries, including the BRICS group to issue a new unified currency, are progressing. This effort will undoubtedly erode the dollar's hegemony over the world's economies.
As we know that the dollar is the main currency in the world since the end of World War II, and it is used for about half of international trade, international loans and global debt securities. It is also the most traded currency in the foreign exchange market, and it holds the most reserves of central banks in the world.
However, today this currency is facing some challenges from emerging currencies, especially the Chinese yuan, which is supported by the second largest economy and trading partner in the world, "China", which operates to promote the use of its currency in international trade and investment. Some countries have expressed their agreement to use the Chinese currency in their transactions.
The dollar has also faced some risks in wake of US financial sanctions against some hostile countries. These sanctions limit a foreigner’s access to the US financial system, and reduce confidence in the dollar as a global currency. It is difficult to predict how long the dollar will remain as a major currency in the world, but it depends on many other factors such as economic growth of countries, trade relations, political stability and financial innovation, indicating that the dollar will continue to dominate for some decades, while some believe that this currency will face more competition, thereby weakening its appeal.
Some financial advisors in America believe that the BRICS currency may pose a serious threat to the dollar, given that this group is geographically diverse and it is large in its population and geographical area. It will pose a unique threat to the hegemony of the dollar, and it is working to achieve a level of self-sufficiency in international trade between them, at a time when the anti-dollar campaign is extending today by some officials in Europe as well, while France decided to sign a trade deal with China in its local currency, the yuan.
This means that the dominance of the dollar in trade and global investment flows is facing a large number of new threats as a result of the BRICS plans to promote the use of alternative currencies to the dollar in their projects and through a stable currency backed by gold and a new reserve currency among them.
Some reports indicate that the status of the US dollar as a reserve currency has eroded in the past year at a rate of 10 times the speed seen in the past twenty years, while for decades it was the sovereign as the reserve currency in the world, and it is widely used in cross-border trade, especially for commodities such as oil. However, its lustre has declined since last year, and experts believe this decline will become more evident in the coming years.
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