Why is the world using dollars instead of other currency
5
1The U.S. dollar is used so widely around the world not because it's the strongest currency, but because it's the most trusted, stable, and liquid. Here’s why the dollar dominates, even though other currencies might be technically "stronger" in value:
1. Historical Influence
After World War II, the U.S. emerged as the world's leading economic power. The Bretton Woods Agreement (1944) established the U.S. dollar as the world’s primary reserve currency, pegged to gold (until 1971). This gave it a head start in becoming the global standard.
2. Global Trust and Stability
Countries and investors trust the U.S. government and economy to remain relatively stable. That trust means people are comfortable holding dollars—even in uncertain times—because they believe it will hold its value.
3. Global Trade and Oil Pricing
Many commodities like oil, gold, and wheat are priced in dollars. This forces countries to hold large amounts of dollars for trade, even if they don’t use it locally.
4. Massive Usage in International Finance
Over 60% of global foreign exchange reserves are held in U.S. dollars. It's also the most used currency for global debt issuance, loans, and cross-border payments.
5. Financial Infrastructure
Global institutions, like the International Monetary Fund (IMF) and World Bank, often use dollars for transactions. The dollar is also integrated into banking and payment systems worldwide.
How do you vote?