Global currencies are widely used in cross-border monetary operations, finance and trade. For the issuing sovereigns, these currencies come with both benefits and costs and can therefore have significant implications for creditworthiness. In this report, we explore the drivers of global currency status and the prospects for change in the international monetary system, specifically, whether the dominance of the US dollar can be challenged by a rise of the euro and the renminbi.
Global currency status can be gained or lost, most recently in the aftermath of World War II, when the US dollar overtook the British pound as the world’s leading currency. Now, the dominance of the dollar is being tested, with China’s rising economic and political clout and Europe renewing its efforts to strengthen the euro’s global role.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
