Alternative Assets That Are Trying to Replace USD
The dollar isn't going away, but other assets classes are slowly chipping away at its dominance.
The US dollar is the world's top reserve currency — by far. CFOTO/Future Publishing via Getty Images
The US dollar has been the world's reserve currency since the second world war, playing a crucial role in the world's trade.
But countries globally are now lining up backup currencies for trade, as sanctions against Russia over its invasion of Ukraine have led to some prominent world leaders and business figures sounding a warning over the power Washington — and the US dollar — wields.
Sanctioned countries like Russia and emerging nations like Argentina have recently started using the Chinese yuan for trade, primarily with China.
Even so, there's no indication the dollar's dominance could fade in the foreseeable future, simply because the currency is such an integral part of the world economy, Insider's Jennifer Sor reported on May 6.
The dollar is by far the world's most dominant reserve currency — meaning a large quantity of a foreign currency held by central banks and major financial institutes for their use from investments to payments.
In 1999, over 70% of the world's foreign exchange reserves were held in the US dollar.
But that percentage has been dropping — the dollar's share in global foreign exchange reserves fell to under 60% in the fourth quarter of 2021, the International Monetary Fund, or IMF, said in a June 2022 blog post.
And despite accounting for the lion's share, or 54%, of global foreign exchange reserves in the fourth quarter of 2022, there has been a decline in the dollar's share of the total foreign reserve pie, per IMF data.
But this doesn't mean America's strategic competitors — like China — wouldn't stop challenging American hegemony. Even alternative currencies like the Swedish krona, the South Korean won, and the Australian and Canadian dollars have been chipping away at the greenback's share.
Read further for five assets that are trying to topple the dollar's dominance.
Source: Business Insider
