The US Dollar is Here to Stay
With the Bretton Woods system, the US Dollar became a symbol for stability and prosperity. However, since the global currency system collapsed in the early seventies, the dominance of the dollar has been questioned more or less continuously. With the global economic crisis of 2008, dollar pessimists were on the upswing once more, and in 2010 Maximilian Mayer and Jost Wübbeke that “in sketches, a new currency geography is already recognizable”. Yet until now, the dollar has remained the only globally dominant currency, profiting from crises both recent and historical, as a relatively “safe haven” for investors. Common examples for the dollar‘s leading position include its role in the trade of key commodities such as oil, metal, and agricultural products, all of which continue to be denominated in dollars. Today there are more than $829 billion dollars in circulation, the majority outside of the US (Fed 2008). According to The Economist (2011), 66 countries worldwide use the dollar as a legal tender, peg their currencies to it or run their exchange rate against it. All in all, the dollar remains the number one in all international currency functions. But will the dollar be able to defend its leading position in the foreseeable future?