Why The U.S. Dollar Will End As The World's Main Reserve Currency

Why The Dollar's Reign Is Near An End -- Wall Street Journal

For decades the dollar has served as the world's main reserve currency, but, argues Barry Eichengreen, it will soon have to share that role. Here's why—and what it will mean for international markets and companies.

The single most astonishing fact about foreign exchange is not the high volume of transactions, as incredible as that growth has been. Nor is it the volatility of currency rates, as wild as the markets are these days.

Instead, it's the extent to which the market remains dollar-centric.

Consider this: When a South Korean wine wholesaler wants to import Chilean cabernet, the Korean importer buys U.S. dollars, not pesos, with which to pay the Chilean exporter. Indeed, the dollar is virtually the exclusive vehicle for foreign-exchange transactions between Chile and Korea, despite the fact that less than 20% of the merchandise trade of both countries is with the U.S.

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My Comment: The dollar's decline will also have a profound impact on U.S. ability and influence in shaping world events. Since the end of the Second World War this ability has been a stabilizing influence .... but with it's decline we are now seeing numerous competing interests trying to usurp this role either in a regional situation, or on the world stage. Will this result in more wars and conflicts .... personally I do not know .... but recent events in the middle East and the rise in tensions in Asia by China does not make me feel comfortable on where all of this is heading.