Economic Insights — The U.S. dollar has been the dominant international currency for decades, much to the benefit of the U.S. economy. But with this dominance comes risks.
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When it comes to the global economy, typically one currency is widely used for invoicing international trade, denominating global financial contracts, and serving as a reserve asset. For 80 years, that currency has been the U.S. dollar. This helps the U.S. economy but also creates risks. This article discusses how the U.S. dollar became the dominant international currency, the benefits and risks associated with being the dominant international currency, and challenges to the dollar’s dominance. The author finds that the most feasible alternative to the U.S. dollar may be a stablecoin pegged to a basket of sovereign currencies.
This article appeared in the Third Quarter 2025 issue of Economic Insights. Download and read the full issue.
