Finance

The U.S. Dollar Is Unlikely to Lose Its Top Spot to Libra or the Yuan

According to one economist, it “doesn't have to be great, it just has to be the least worst one.”

Illustration: Nichole Shinn for Bloomberg Businessweek

Provide news feedback or report an error

Confidential tip?

Send a tip to our reporters

Site feedback:

Take our Survey

By Yalman Onaran

July 18, 2019 at 9:00 AM UTC

This article is for subscribers only.

This article is part of the July 22, 2019 issue of businessweek.

The U.S. gets perks from the dollar’s lofty status in international trade, starting with the ability to borrow more cheaply. So the dollar has long faced wannabe competitors. The euro was created partly to chip away at its dominance, and China has been pushing for the yuan to be used more widely. Neither currency has dislodged the greenback from its perch. According to data going back to 1989, the dollar hasn’t lost any of its share in central banks’ foreign currency reserves, in currency trading, or in the cross-border liabilities of banks. Its share of debt issued in foreign currency has grown.

Yet challenges keep coming. There’s digital currency, such as Facebook Inc.’s planned Libra, and President Donald Trump’s trade wars and isolationist policies, which have given other countries an extra nudge to seek alternatives. Europe is attempting to circumvent U.S. sanctions against Iran by establishing an alternative payment system that wouldn’t depend on dollars.