Reconstructing global currency: What comes after the Dollar?

By Ismaheel Taofeeq Adisa

China is leading the charge with their Central Bank Digital Currency (CBDC). This system would replace cash but not yet replace banks — it would be based on blockchain technology and offer many features that were once only available through banking networks. This includes payment traceability, digital asset exchange and even user identity verification. The goal? To create a digital yuan that can be used by anyone around the globe.

It’s remarkable how much power a single currency can have. For decades, the U.S. dollar has held a place of near-supremacy in the global financial system, dominating international trade and finance transactions like no other currency before it. But with the emergence of new economic powers and the shifting dynamics of global trade, is it possible that another currency will soon take its place?

As we look to the future of global finance and commerce, one thing is certain: The dollar is no longer a sure bet. But what comes next? In this article, we’ll explore the possibilities and examine what a world without the dollar as its primary reserve currency might look like—and what implications this could have on businesses around the world.

For the past decade, the US dollar has been the world’s “goto” currency, and its value has grown exponentially over that time. This is due in large part to the fact that it is trusted around the world and seen as a secure and reliable currency. That said, there are signs that it may be nearing its end as the global preeminent currency, suggesting it is time to think about what will come after it.

This isn’t a new phenomenon; many times throughout history, currencies have come to dominate global markets only to be eventually displaced by something else. From the Roman denarius to colonial paper money to gold-backed coins, currencies have been fundamental in shaping our international economy. We are now at a crossroads where we have to consider what will take the dollar’s place and how we can create a new global standard.

For decades, the US dollar has reigned supreme as the world’s most stable currency. But things are changing—and fast. Escalating geopolitical tensions and an unstable international economy have eroded the relative value of the greenback compared to other currencies. In fact, according to recent reports, 6 out of the 10 strongest currencies in 2020 were not even American.

The decline in global confidence in the dollar has caused investors to seek out alternative stores of wealth. Countries such as China, Russia and India have all publicly stated their intentions to move away from dependence on the dollar, eventually replacing it with a more stable currency. And while no one currency has emerged to challenge its supremacy yet, one thing is for sure: The reign of the US dollar is coming to an end—sooner than later.

So, what challenges exist to the US Dollar’s status as the world’s premier currency?

First, it’s worth noting that the Euro remains a strong challenger. The Eurozone is a powerful economic force and the European Central Bank (ECB) has developed a monetary policy as sophisticated as that of the Federal Reserve.

The Euro is also used by many countries outside of the Eurozone, such as Andorra and Kosovo. This means that the Euro can be seen as offering a currency choice to nations beyond Europe—so it makes sense that Europe’s currency should get an automatic boost from this increased demand.

Second, there’s China’s push for internationalization of its Yuan currency, with Chinese policymakers taking steps towards making their currency more attractive to investors on a global stage. Finally, there are digital currencies like Bitcoin, which aren’t backed by any nation or central bank yet remain popular for their potential for security and relatively lower transaction costs.

So while its strength looks unchallengeable right now, it seems only a matter of time before we see major changes in the global economy—changes which will not be kind to the US Dollar’s longheld superiority.

Have you ever heard of a digital global currency? It’s no longer just a pipe dream — there’s an active race to become the world’s first digital currency, and not surprisingly, it involves some of the largest nations on earth.

China is leading the charge with their Central Bank Digital Currency (CBDC). This system would replace cash but not yet replace banks — it would be based on blockchain technology and offer many features that were once only available through banking networks. This includes payment traceability, digital asset exchange and even user identity verification. The goal? To create a digital yuan that can be used by anyone around the globe.

It isn’t just China that’s making a move: central banks from Europe to South America are looking into creating their own versions of a digital global currency as well. The European Central Bank was one of the first to announce plans to create a digital euro and countries like Japan, Canada and Switzerland are also in talks about developing their own currencies.

The thing these countries have in common? They’re all working towards creating a single, widely accepted form of global currency that could eventually replace the dollar as the go-to international reserve currency.

The dominance of the dollar in global transactions has had a profound effect on the world. It has solidified US economic supremacy, allowing it to shape international trade policies and influence geopolitics. But what would happen if the greenback loses its crown as the world’s premier currency?

A few challengers have emerged that could end the dollar’s dominance, such as China’s digital yuan and the facebook-backed cryptocurrency Diem. This could lead to a more decentralized global economic system, with several nations having increased control over their own economies and their own currencies.

These challengers could also make it easier for cross-border payments and investments across different nations, allowing countries to bypass US regulations like sanctions or tariffs. This will likely open up new markets for goods and services, driving global trade growth and reducing inequality between nations at different levels of development.

The end of US dollar supremacy could be a catalyst for global economic change – not just in terms of trade relations, but also in terms of overall prosperity and equity between countries. While there are still plenty of unknowns about what comes next, one thing is certain: the global economy is shifting into uncharted territory.

Ismaheel Taofeeq Adisa is a Public Policy Analyst.