Living in a US Dollar-centric world for years to come – UBS

While competition for the Dollar is rising, economists at UBS do not see any leading rival to dethrone the currency in coming years.

Dollar supremacy

The US Dollar dominates financial markets and international trade. Changes in the world’s dominant currency have historically taken a long time to materialize. Even as great economic powers rise and fall, their currencies’ reserve status tends to survive well past the peak of their influence. 

Liquidity ranks at the very top of the properties that global reserve managers and those involved in international trade look for in a currency. The US Dollar remains the world’s dominant currency in this realm.

For all the challenges the US financial and political system is experiencing, the country still ranks highly in various gauges, including rule of law, regulatory quality and efficiency, and market openness (the prevalence of capital controls, for example). As a result, the US continues to attract large flows of foreign investment.