The Role Of US Dollar in Global Trade

[Fragrance1122]

1. Trade
A) Most countries bill each other in dollars.
B) Oil, gold, wheat = All priced in USD.
C) Most shipping contracts are in USD too.

2. Finance
A) Most international payments use USD.
B) Loans in USD are cheaper.
C) 9 out of 10 currency trades involve USD.

3. Power 
A) Every country needs USD to buy stuff.
B) The US can sanction others by blocking USD.

4. Will it change?
A) China, Russia, India want to use Yuan/Rupee.
B)  But USD is still king and 60% of the world still uses it.


Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

[Nathrixxx]

The global trade is becoming more independent and we don't have to see a number of people depending much on the use of Fiat currency when we are already going far in cryptocurrency and this has been a unique opportunity for every actors to make profits in their financial and business Enterprise, with time we will see how bitcoin could also be a mainstream the same way we use Fiat currency as a global coin for international trades and other purposes, even though this is already becoming a reality and we only needed more time to achieve a unified adoption rate to Bitcoin in serving all this purposes.

[Mhizlove]

When it's comes to the US dollar, another reason is that it is wisely accepted around the world and it also has this high liquidity, which makes it easier for sellers, buyers and lenders to do business without being afraid or get worried about the exchange rate issues. When it comes to loan, alot of businesses choose USD because the interest rates most times is lower a d also the currency is easir6to use when it comes to international businesses. The risk is that if the local currency loses it's worth or value, the loan will be more expensive when it's time to pay back.

[Fortify]

Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

Did you even try to answer this question, because it's fairly obvious. Over the last 75~ years America has been the most stable and highly economically productive nations in the world. Sure it has it's ups and downs when it comes to politics but it has not defaulted on any debt for a very long time which is the sign of a strong country and that allowed it to become the "reserve currency of the world". It doesn't generally fluctuate too much day to day against other currencies, unless the other currency has a lot of problems of its own. Most people would rather take out loans in local currencies because it's reflective of their earnings, but banks don't trust governments in many countries so force USD loans to protect their own investments.

[BIT-BENDER]

This is why Bitcoin and Crypto-currency is necessary, the dominance of the US dollar can't be overemphasized even if in recent years there has been lots of plans to displace the US dollar from its world wide dominance I still believe that it will require a mountain effort to see that even coming to pass.
Bitcoin on the other hand provide a decentralised system that every other country can appreciate and take advantage of, the fact that no country controls Bitcoin set it aside from any other currency.

[Zlantann]

B) Loans in USD are cheaper.

Could you please explain how loans are cheaper in USD?

4. Will it change?
A) China, Russia, India want to use Yuan/Rupee.
B)  But USD is still king and 60% of the world still uses it.

There were proposals for the establishment of a single currency by BRICS nations. But this has not materialised. However, Russia, India and China are using their local currency for trade payments.

Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

You didn't add that Bitcoin is also priced in USD. The US has the largest economy, and it has been stable for a long time. The USD has also been stable, so many countries are using it as a reserve currency. International trade is less complex when the dollar is involved.

[WillyAp]

1. Trade
A) Most countries bill each other in dollars.
B) Oil, gold, wheat = All priced in USD.
C) Most shipping contracts are in USD too.

2. Finance
A) Most international payments use USD.
B) Loans in USD are cheaper.
C) 9 out of 10 currency trades involve USD.

3. Power 
A) Every country needs USD to buy stuff.
B) The US can sanction others by blocking USD.

4. Will it change?
A) China, Russia, India want to use Yuan/Rupee.
B)  But USD is still king and 60% of the world still uses it.


Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

The USD is easily available in most countries, the most popular stable coins mimic the USD.
Privat businesses save in USD. Which now is under more pressure due to stable coins. How those will behave in a mayor stock exchange bust, no one know. 

[Hypnotizer]

Now the questions are
1) why are oil, gold and wheat almost priced in USD?

Since the USD has established itself as a globally accepted and recognized currency in trade, pricing goods that are exported/imported in USD actually makes it easier for the trade. The USD acts like a mediator for the trade in that sense and that’s possible because everyone accepts USD and you can easily spend the USD whenever/wherever you want to.

2) Why most of the loans are taken in USD despite local currencies?

AFAIK people don’t really take out loans in USD atleast where I live except if they’re collecting it from someone not in the country or someone that doesn’t use their local currency. People mostly take loans from banks or lending companies and those institutions dispose the loans in Local currency not in USD.

[Cryptomultiplier]

B) Loans in USD are cheaper.

Could you please explain how loans are cheaper in USD?

4. Will it change?
A) China, Russia, India want to use Yuan/Rupee.
B)  But USD is still king and 60% of the world still uses it.

There were proposals for the establishment of a single currency by BRICS nations. But this has not materialised. However, Russia, India and China are using their local currency for trade payments.

Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

You didn't add that Bitcoin is also priced in USD. The US has the largest economy, and it has been stable for a long time. The USD has also been stable, so many countries are using it as a reserve currency. International trade is less complex when the dollar is involved.

The U.S dollar is always for now going to be among the top leading currencies of the world because of its dominance despite the claims of de-dollarization or despite the rise of multi polar trade blocks.
The U.S dollar even outperforms the economic load of the U.S and that shows you how standard, grounded and structurally sound it is from a grand perspective.

[Mahiyammahi]

The dollar began to be used in the world when the US and Saudi Arabia signed a petrodollar agreement. Every country must import fuel oil. And Saudi Arabia and Qatar are the biggest candidates who sell fuel oil. Now that they have signed an agreement with the USA, they are selling oil in dollars.

 Since then, the whole world has been dealing in dollars. And every country spends a huge amount of money only in the field of energy. That is why it is slowly becoming accepted by everyone. On the other hand, Russian, ruble, Chinese yuan, they are independent, they rarely deal in dollars. Even the countries they are dealing with or helping always accept payments in their own currency.

[Spaceman1000$]

1. Trade
A) Most countries bill each other in dollars.
B) Oil, gold, wheat = All priced in USD.
C) Most shipping contracts are in USD too.

2. Finance
A) Most international payments use USD.
B) Loans in USD are cheaper.
C) 9 out of 10 currency trades involve USD.

3. Power 
A) Every country needs USD to buy stuff.
B) The US can sanction others by blocking USD.

4. Will it change?
A) China, Russia, India want to use Yuan/Rupee.
B)  But USD is still king and 60% of the world still uses it.


Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

For conversations like this that concerns the dominance of USD over every other currency in the globe, it has been had on several threads, and I'm not surprised that I'm also seeing such question from you OP,  before now the USD has already taken dominance in the global markets, whatever realization people are having now is aftermath. First you should understand that in the world economy, the United States of America has one of the largest economy of the world, Their technological advancement has been there long before now, All of these help in building their influence across the globe, this is why when some persons want to do business, they will always want to refer to an economy or a currency that has influence for them to do their business. So until we start seeing a different world power that has global influence more than America ,That is where you will see probably the USD not having such influence in global trade, but for now, they are literally the World power, and people will always want to relate with the persons that has influence and power.

[abhiseshakana]

For conversations like this that concerns the dominance of USD over every other currency in the globe, it has been had on several threads, and I'm not surprised that I'm also seeing such question from you OP,  before now the USD has already taken dominance in the global markets, whatever realization people are having now is aftermath. First you should understand that in the world economy, the United States of America has one of the largest economy of the world, Their technological advancement has been there long before now, All of these help in building their influence across the globe, this is why when some persons want to do business, they will always want to refer to an economy or a currency that has influence for them to do their business. So until we start seeing a different world power that has global influence more than America ,That is where you will see probably the USD not having such influence in global trade, but for now, they are literally the World power, and people will always want to relate with the persons that has influence and power.

I think talking about currency or FIAT is ultimately talking about trust. Why USD still dominated the world even the US has a ton of problems such as sovereign debt crisis, inflation fiscal deficit & internal political crisis ? The answer is majority of global investor still believe and view US as the safest place, the most liquid place and the most trustworthy place to store their money as large scale capital. As long as USD remains the most trusted currency the the cycle will continue to rotate and strengthens the USD position. Investor trus to US, they spend money buying asset on USD, USD demand increase, USD remain strong, Stong USD make more people believe and attract more and more capital.

[tabas]

1. Trade
A) Most countries bill each other in dollars.
B) Oil, gold, wheat = All priced in USD.
C) Most shipping contracts are in USD too.

2. Finance
A) Most international payments use USD.
B) Loans in USD are cheaper.
C) 9 out of 10 currency trades involve USD.

3. Power 
A) Every country needs USD to buy stuff.
B) The US can sanction others by blocking USD.

4. Will it change?
A) China, Russia, India want to use Yuan/Rupee.
B)  But USD is still king and 60% of the world still uses it.

Don't forget about that many countries have been using USD as their reserve currency.

Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

1. That's because of their agreements to these countries who produce oil. If the producer of these oil products will change their main currency for purchasing it like CNY, that will change everything and that's why US is mad for seeing potential change of Saudi Arabia from USD to Chinese yuan.
2. I'm not sure about that. If you're not from the US, I don't think that they'll give you a loan out of it. What I think is, many banks have this USD deposits availability even if you're not from the US.

[juttsab@]

The US dollar is working as trading currency from decades and it is the world dominant reserve, that's why the prices of wheat, gold and oil are in USD. When the single currency is used all over the world that makes the international level trade much easier and simple and it also reduces the exchange rate related complications because all the countries of the world holds dollar reserve.

Many companies and governments  borrows in USD because of the lower interest rate in their local markets and it is also considered as a very stable currency all over the world and then investor’s on the international levels are more willing to lend in USD because they are more confident in it but it also has exchange rate risk,  if someone's country's currency become weak infront of the dollar then they have to pay more amount in the form of loan that become very expensive for them.

[STT]

No other currency has the depth of trade and liquidity that enable Dollar to offer so many different products financially and securely to both the creditor and debtor reliably year in and year out.
     Despite its many faults and the short changing of every other nation secondary to the issuing party nation, many or even most other currencies fail to provide long term reliable security hence trust is lacking and inferior to the dollar.

   We could use gold and all kinds of alternatives but they would likely be less liquid and less available to all parties, neither the Rupee or Yuan is reliable or trusted to be used worldwide.

  Sadly both of the worlds largest nations routinely undermine open trade and basic liberty to venture capital and profit from free trade, they restrict and add bias that prevents business so globally extending that bad policy and the currency would seem unlikely.

[viljy]

The dollar has been and remains the main global currency. The growing importance of the yuan alongside the dollar only adds an alternative to international transactions. In fact, no country is interested in the collapse of the dollar. This is because many countries foreign exchange reserves include dollars and treasuries, even if their share is small. Additionally, the collapse of the dollar would cause a chain reaction in the economy, leading to losses for all participants in international trade.

[davis196]

Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

1.The banking settlement infrastructure was created around the US dollar. That is a relic from the past, back when the US dollar was pegged to gold(before the early 70s). AFAIK, the SWIFT system is predominantly American. China and Russia want to create their own settlement system, but the process is very slow and it would take years. The USA is a big oil, wheat and gas exporter. Do you think that the US exporters would accept Chinese yuan and Indian rupees for their goods and commodities?
2.The USD is a relatively stable global currency. Local currencies are losing value faster than the US dollar. No major bank and investment fund would take government bonds and treasuries issued in local currencies seriously. The interest rates on such bonds and treasuries would also be very high, to cover the currency risks.

[DrBeer]

B) Loans in USD are cheaper.

Could you please explain how loans are cheaper in USD?

4. Will it change?
A) China, Russia, India want to use Yuan/Rupee.
B)  But USD is still king and 60% of the world still uses it.

There were proposals for the establishment of a single currency by BRICS nations. But this has not materialised. However, Russia, India and China are using their local currency for trade payments.

Now the questions are
1) why are oil, gold and wheat almost priced in USD?
2) Why most of the loans are taken in USD despite local currencies?

You didn't add that Bitcoin is also priced in USD. The US has the largest economy, and it has been stable for a long time. The USD has also been stable, so many countries are using it as a reserve currency. International trade is less complex when the dollar is involved.

Let me answer your questions to another forum member

1.Loans in dollars are cheaper for a simple reason - the dollar is less exposed to inflation and other risks than local currency.
2.BRICS wanted to create a single currency, but the idea failed. The reasons are also trivial. The main reasons for the project's collapse are:

Economic asymmetry of the participants
-The structures of the BRICS economies are too different.
-China's dominance creates risks of turning the single currency into a hidden “yuan zone”.
-Inflation, government debt and monetary policy of the countries are radically different.

Political resistance within the bloc
-India officially blocked the idea, fearing a stronger China.
-Brazil and South Africa refused to sacrifice control over their central banks.
-Lack of deep integration: the BRICS remains a geopolitical forum rather than an economic union like the EU.
 
Low level of internal trade
-The volume of trade directly between BRICS members is only about 6% of their total external turnover.
-Most of the bloc's countries are more dependent on the US and European markets than on each other.
 
Technical and infrastructural unpreparedness
-The bloc lacks a single central bank and common rules for financial regulation.
-Even alternative projects (like the BRICS Pay digital system) have stalled due to mutual distrust in cybersecurity and data control issues

An attempt by some participants to turn the BRICS economic union and single currency into a political tool for their own non-BRICS objectives.

[el kaka22]

I do dislike this trolls posts almost all the time. But one thing I want to emphasize is the fact that we are seeing USD losing this power, we are seeing plenty of nations, who trade with each other, stop using USD now, it is not all nations, but there are many. They might be using euro, or yuan, or rube, or whatever else you know, doesn't matter what it is.

We should realize that it is not going to eb easy to make this work, because USD is still more stable than most other fiats, but it is still something that would not be a bad idea.

[MFahad]

The global trade is becoming more independent and we don't have to see a number of people depending much on the use of Fiat currency when we are already going far in cryptocurrency and this has been a unique opportunity for every actors to make profits in their financial and business Enterprise, with time we will see how bitcoin could also be a mainstream the same way we use Fiat currency as a global coin for international trades and other purposes, even though this is already becoming a reality and we only needed more time to achieve a unified adoption rate to Bitcoin in serving all this purposes.

I would partially agree to this point that crypto-currency especially Bitcoin is becoming more important factor for international trades although bitcoin has changed the way of people thinking about investing money. However, I do not think so that it will replace the Fiat currency in near future because there are still many challenges to face like Government statutes or public policy price fluctuations and limitation of acceptance from many countries. the continuous development of blockchain technology and increasing awareness among peoples in world may help crypto-currency gain wider acceptance in the upcoming years. On the other hand I think in future both currency will serve side by side for there different purposes.