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Us Dollar Supremacy..

The US Dollar (USD) is the dominant global reserve currency, accounting for over 58% of forex reserves, established through historical agreements and economic stability. Its supremacy benefits the US through low borrowing costs and control over monetary policies, while also presenting challenges such as economic imbalances and the weaponization of the dollar. Global responses include de-dollarization efforts by countries like China and BRICS, exploring alternative currencies and payment systems, although the USD is expected to remain dominant in the near term.

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Ram Abhay
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34 views10 pages

Us Dollar Supremacy..

The US Dollar (USD) is the dominant global reserve currency, accounting for over 58% of forex reserves, established through historical agreements and economic stability. Its supremacy benefits the US through low borrowing costs and control over monetary policies, while also presenting challenges such as economic imbalances and the weaponization of the dollar. Global responses include de-dollarization efforts by countries like China and BRICS, exploring alternative currencies and payment systems, although the USD is expected to remain dominant in the near term.

Uploaded by

Ram Abhay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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‘THE SUPREMACY OF THE US DOLLAR :

causes and global response’

Submitted by : Submitted to :
Abhay ram Dr. C.D.Lakhlani
Reg. no. : 2072124018
The US Dollar (USD) is the world's most dominant reserve currency.
- Accounts for over 58% of global forex reserves (IMF, 2024).
 History of USD :-

 1944 Bretton Woods Agreement*: Established the USD as the global reserve currency, backed
by gold.

 1971 Nixon Shock : USD became fiat currency, but retained dominance due to global trust in
US economy.

 Post-WWII economic stability: The US emerged as the largest economy with unmatched
global influence.
 Causes of US Dollar Supremacy :-

 Economic Stability:
- Largest and most diversified economy.
- Safe-haven asset during crises.
 Petrodollar System:
- Oil transactions primarily in USD.
 Global Trade and Investment:
- USD facilitates ~88% of forex trades.
- Preferred for international trade settlements.
 Trust in US Institutions:
- Independent Federal Reserve.
- Stable political system (historically).
 Benefits of Dollar Supremacy :-
 For the US :
- Low borrowing costs (seigniorage).
- Control over global monetary policies.
 For Other Countries :
- Stable reserve currency.
- Easier access to global trade and credit.
 Global Criticism and Challenges :-
1. Economic Imbalance:
- US debt financed by foreign reserves.
- Creates dependency on USD.
2. Weaponization of the Dollar:
- Sanctions and trade restrictions affect nations like Russia and Iran.
3. Currency Risks:
- Fluctuations impact developing economies .
 Global Responses :-

 De-dollarization Efforts :
China: Promoting yuan through Belt and Road Initiative.
BRICS Nations: Push for alternative currencies.
EU: Strengthening the Euro.

 Central Bank Digital Currencies (CBDCs):


Countries exploring digital alternatives to reduce USD dependency.

 Regional Trade Agreements:


Promoting local currencies in trade.
 What is BRICS ?
BRICS is a group of 5 emerging economies: Brazil, Russia, India, China, and South Africa. They
aim to promote economic cooperation, global governance, and sustainable development. De-
Dollarization Strategies
 Local currency trade: Trade between BRICS countries using their own currencies, reducing
dependence on the US dollar
 Alternative payment systems:
Developing systems like SPFS and CIPS to reduce reliance on SWIFT, a US-dominated payment
system.
 Reserve currency diversification: Investing in other currencies and gold to reduce dependence
on the US dollar.

 Future Outlook :
 USD likely to remain dominant in the near term.
 Rise of multipolar currency systems.
 Need for international cooperation for global financial stability.
 Conclusion :-
• The US Dollar’s supremacy is deeply rooted in economic and political factors.

• Challenges are emerging, but responses are fragmented.

• The global financial system is evolving, but trust remains key.

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