The End of "USD" as the World's Reserve Currency

[Abiky]

As a result of the COVID-19 pandemic, we're entering a recession in the world's economy. The US and some other countries are printing money like crazy, leading towards the inflation of national currencies in such a short time. For long, the US has been the leading economy where many countries rely on the USD as the reserve currency in the world. But all of this may soon change, as people are starting to lose trust in The FED. As the US economy plummets, the world will be looking for another substitute of the USD as the reserve currency for the global economy. Depending on how long the outbreak lasts in the mainstream world, the process of the USD's collapse will be either a slow or speedy one.

If the world replaces the USD as its reserve currency, things might change drastically for the global economy. My guess is that either the Yuan or the Euro will become the successor of the USD in the future. Long before the COVID-19 outbreak began, the USD has been in a constant decline in value. Now that COVID-19 has negatively impacted the economy, the USD's stance could be threatened in the long term.

What are your thoughts? Will COVID-19 destroy the US' economy, leading to the rise of another reserve currency (especially when the US is the #1 country with coronavirus cases)? Or will the USD still thrive?

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[davis196]

Dude,stop preaching about things that might not happen.
The US dollar will remain a global reserve currency with or without the corona pandemic and the corona recession.The US economy is still the strongest economy in the world and the majority of the people around the world trust the US dollar,because it is a well known and stable currency.
I'm not advocating and I'm not the biggest US dollar fan,but this is the reality.The euro and the yen aren't even close to the US dollar,in terms of global usage.

[Tytanowy Janusz]

What are your thoughts? Will COVID-19 destroy the US' economy, leading to the rise of another reserve currency (especially when the US is the #1 country with coronavirus cases)? Or will the USD still thrive?

My thoughts:
Not yet. Covid will pass and everything will go back to normal. But not for long. Damages made are irreversible (not only covid but also 2008 crisis mistakes and decades of current economy system) and after 1-2 years of slow bleeding things will speed-up. Leading economy (most likely China together with Russia if we will not see global military conflict before) will choose new reserve currency (and settlement currency for markets like OIL). It will free a huge amount of dollars that will flood the system and cause hyperinflation. I will buy 100 million $ and use it as wallpaper in my room.



I don't think that euro will  play any important role in future economics. I bet the eurozone will collapse just before or after the dollar.

Dude,stop preaching about things that might not happen.
The US dollar will remain a global reserve currency with or without the corona pandemic and the corona recession.The US economy is still the strongest economy in the world and the majority of the people around the world trust the US dollar,because it is a well known and stable currency.
I'm not advocating and I'm not the biggest US dollar fan,but this is the reality.The euro and the yen aren't even close to the US dollar,in terms of global usage.

The US unemployment rate


$3 trillion print:



This is close to 4% of whole world money supply printed by FED in last 2 months.

the broad money supply ($80.9 trillion).

[michellee]

I don't think that Covid-19 will destroy the US economy, but if the Covid-19 stays for a long time, then that could be possible, and not just the US but the other countries will have the same. All country will face a constant decline in value as you said, and we might need something that can replace all the currency. As the big power country, the US will do anything they can to prevent the collapse of the economy in their country, and they will survive in the pandemic Covid-19.

[abhiseshakana]

I am among those who hope that the dollar will no longer be an international currency, but in reality, there is no country as strong as the United States today. Although in terms of trade and finance, American domination has been shifted by China, but the Dollar still controls more than half of global foreign exchange reserves. While the Euro is only one-third of the dollar portion while the Yuan contributes one-hundredth of a dollar portion.

The main legitimacy of the dominance of the American currency in the world is MILITARY POWER. The number of countries in the world is around 200 but America has almost 800, military bases outside the United States, besides that the US military budget is super WOW.

America is a country whose grand plans strategy has not changed since the first world war namely control of world wealth and America will keep it forever in American hands. America with the shadow's support is a force too big to conquer. China is indeed now challenging America but China itself with OBOR is happier if the dollar strengthens and even deliberately often weakens the Yuan currency for trading profits.

Germany and Japan as countries losing the war in the shadows of the United States while Europe also needs America to balance Russia's power, if the third world war really flares up.

[Tytanowy Janusz]

The main legitimacy of the dominance of the American currency in the world is MILITARY POWER.

Do you think that US military power will remain as strong as it is now with 30% unemployment rate that will stay like that for months? Who will pay for this? Printing has it's limits. When USD supply will increase 10-20% annualy countries will start to move money from dollar to other assets/currencies. That's why i posted that it will take up to 2 years for things to speed up. That's just my thoughts. I'm interested in yours.

[exstasie]

The USD looks pretty strong to me.....

The US dollar is still king during the coronavirus
Dollar Reigns Supreme During Virus Crisis With Yuan Stuck in Shadows

Currencies of poor and developing countries are a blood bath vs. USD right now. The DXY is just the tip of the iceberg:



If the global economy succumbs to deflation, debt deflation will keep pushing the dollar higher. Longer term, 5-20 years maybe, the USD could start falling from grace. Presently though there are no signs of it, nor are there any real competitors.

[Tytanowy Janusz]

The USD looks pretty strong to me.....

Strengthening the dollar is something normal in the early stages of the financial crisis. I think it is not an indicator of how it will perform during crisis.

Just like bitcoin fail hard during Covid market crash and now fully recover. Dollar was strong during market crash and may sink during financial crisis.

[Coyster]

Imo too much attention is directed at the United States of America, it's not an American pandemic, it's a global one and every country and currency is experiencing the downturn effects of this pandemic, even the Euro and Yuan you suppose is going to take over the USD's place as the reserve currency of the world is still below the USD and are also going to take steps back after this pandemic the same way the USD will, so there's no chance they are taking over now.

Do you think that US military power will remain as strong as it is now with 30% unemployment rate that will stay like that for months? Who will pay for this? Printing has it's limits.

The United States basks in the strength of their defense force and this area is one that wouldn't be weakened even with all this economic crisis and unemployment going on. The United States is under the constant watch of alot of foes, so no matter the cost they cannot let their guard down in military strength/power.

[exstasie]

The USD looks pretty strong to me.....

Strengthening the dollar is something normal in the early stages of the financial crisis. I think it is not an indicator of how it will perform during crisis.

Good thread on this subject: https://twitter.com/RaoulGMI/status/1254110879479746562

This is the key, and why emerging market currencies are performing so horribly:

We are in a viscous doom loop where slowing growth causes the dollar to rise, which causes slower growth, which causes the dollar to rise, as all borrowers play musical chairs to get access to the dollar to service debts

Notably, the DXY was crushed after the bailouts of 2008 and 2009. This time, no. What changed?

[Darker45]

The end of USD as the topmost reserve currency of the world is far from happening. The USD is like Bitcoin in cryptocurrency. The rest of the world's reserve currencies are like altcoins. While it is indeed declining as a global reserve currency, it is still maintaining a dominating 60% plus in the entire world's reserves. The second largest only comprises a third of that number.

The economy of the US is plummeting just like the rest. So I guess there is no need to look for a replacement.

[Tytanowy Janusz]

The United States basks in the strength of their defense force and this area is one that wouldn't be weakened even with all this economic crisis and unemployment going on. The United States is under the constant watch of alot of foes, so no matter the cost they cannot let their guard down in military strength/power.

So they are forced to print.

To save from depth deflation
To remain current military strength
To face 30% unemployment.

This is indeed a "doom loop" and it won't last long till huge global monetary crash (maybe not 2 years, but i doubt that nothing will change in 10 years time frame).

[bits4books]

This has “never” happened and now we can see it again.  someone is engaged in printing money. Scared to death!
Not really. Drastic changes from changing one currency to another will add more problems than benefits. You will need to change a LOT of things and it is not cost-effective in the current situation. Decisions about the reserve currency are made over a cup of coffee in peacetime and not in the recession

[buwaytress]

The end should come, money cycles just means different standards have a limited lifetime, but don't count on the US dollar ending in our lifetime. For as long as we're still predicting 2025 prices in US dollars for Bitcoin, we're not ready for the dollar to stop being the benchmark for value.

I'd personally love to see things getting priced in BTC. Imagine moneychangers having a whole list of pairs against BTC!

But really. I'm not blaming COVID-19 for much, least of all when the economy's in this shitty state because of things that started long before a man in Wuhan ingested some exotic meat.

[fiulpro]

See I do think that the countries which are able to go through this pandemic soon enough will be able to make a greater impact on their economic situation , the country who recovers first will be able to provide greater care for the world , plus people will have a huge advantage over the US , since due to faulty administration plus corrupt politicians they are right now in a disaster which is not going to go away that soon .
They are trying to take help from the countries which they originally hated , this is pretty sarcastic.
I do believe that the dollar will loose its value , I do think it have already lost a significant number of investors and therefore it is undeniably a bad situation for them .

[Findingnemo]

Even though it looks like USD is losing its position as a reserve currency, its still have lot more time to get replace simply because we don't have the alternative reserve fiat yet.Yuan will never become a reserve currency because China's transparency is a big question then no country will agree on getting paid in that currency.

[exstasie]

This is indeed a "doom loop" and it won't last long till huge global monetary crash (maybe not 2 years, but i doubt that nothing will change in 10 years time frame).

That's reasonable.

Even if this is the beginning of the end for the USD as world reserve currency, it won't happen overnight. During the entire interwar period between WWI and WWII, the global monetary system was in a state of flux as the world lost faith in GBP. It wasn't until Bretton Woods was established in 1944 that the greenback's dominance was solidified.

For now, there are no potential replacements. It will take a few years at least to see what contenders emerge, in terms of reserve numbers and transaction liquidity.

[hatshepsut93]

For USD to stop being world's reserve currency, some other currency must take its spot. So far there are no serious candidates to it, China's economy is much more fragile than economy of the US, EU takes very passive role globally and is at risk of being torn from inside, Britain is barely a global power anymore, Russia's economy is a joke. You are so focused on the US and its problems that you don't notice that the rest of the world isn't doing well either.

[shield132]

As a result of the COVID-19 pandemic, we're entering a recession in the world's economy. The US and some other countries are printing money like crazy, leading towards the inflation of national currencies in such a short time. For long, the US has been the leading economy where many countries rely on the USD as the reserve currency in the world. But all of this may soon change, as people are starting to lose trust in The FED. As the US economy plummets, the world will be looking for another substitute of the USD as the reserve currency for the global economy. Depending on how long the outbreak lasts in the mainstream world, the process of the USD's collapse will be either a slow or speedy one.

If the world replaces the USD as its reserve currency, things might change drastically for the global economy. My guess is that either the Yuan or the Euro will become the successor of the USD in the future. Long before the COVID-19 outbreak began, the USD has been in a constant decline in value. Now that COVID-19 has negatively impacted the economy, the USD's stance could be threatened in the long term.

What are your thoughts? Will COVID-19 destroy the US' economy, leading to the rise of another reserve currency (especially when the US is the #1 country with coronavirus cases)? Or will the USD still thrive?

Do you know that at the same time USD rises and strengthens its' value in some countries? Can you imagine that even though USD is printing money like a rocket, it's gaining value in some countries? Sounds paradoxical?
COVID 19 Won't destroy the US's economy, who will lose right now, is china. The USA and Europe will have financial resources to move factories from China to other countries and also there were some rumours that they are going to move pharma manufacturing services from India too. This will happen, with a lot of printed money or not, but will happen.
US economy is big and a lot of countries depend on it. The US is printing money for a lot of times but it still has good value. When are we waiting for crush? People are saying for years that there will be a serious crash but when? And why? Currency's price is a psychological factor too and The US will remain it strong.

davis196 said there that USD is still the most trusted currency too in some countries and is considered as a stable currency.

[mikeauerbach]

Despite the fact that the USA has one of the strongest economy in the world, US dollar becomes weaker. My personal opinion any form of fiat isn't good as reserve currency.