Exploring the Past, Present, and Future of the Shaken Global Reserve Currency, the U.S. Dollar

 The U.S. dollar continues to dominate the international financial market. It is the most widely used currency in cross-border lending, bond markets, and foreign exchange markets. The dollar accounts for 60% of global central bank foreign exchange reserves, underscoring its role as the world’s reserve currency. This monetary hegemony has been a key factor in making the United States the largest economy in the world. But how did the U.S. achieve this dominance?

 In this lecture, Darrell Duffie, a renowned financial expert and Professor of Finance at Stanford Graduate School of Business, explores the past, present, and future of the U.S. dollar’s supremacy. Duffie argues that the United States has intentionally reinforced the dollar’s dominance, leveraging it to maintain its status as a global superpower leading the world economy.

 However, the dynamics are starting to shift. Rising as a G2 powerhouse, China has consistently expressed dissatisfaction with dollar hegemony. It is actively promoting the yuan’s global influence through institutional changes and economic agreements. Additionally, China is working with allied nations to establish alternative payment systems to reduce reliance on the U.S. dollar in cross-border transactions.

 Duffie points out, however, that challenges to dollar dominance are not limited to external factors. Within the United States, several elements also threaten to weaken its monetary hegemony. As the world remains sensitive to every move of the U.S. economy, Duffie provides critical insights into the future of dollar supremacy and its implications for global finance.