The U.S. dollar as world currency

There is a lot of news about the U.S. dollar (USD) and how sustainable it is as the world currency in the future. While I don’t expect a major shift away from the dollar during my lifetime, we do see currencies and their use gradually changing over time.

• Currently the USD represents 58 percent of the world’s central bank reserves. is is down from 75 percent in 2000. is reserve currency is a magnet for foreign investment in the United States, according to William Greiner, CFA®.

• Some of the reasons for the renewed interest in world currencies is due to Russia, China and India talking with Brazil and South America about creating a new currency to challenge the USD. ey want to trade directly with each other in their own currencies.

Let’s take a look at the current facts, according to JP Morgan.

ERIN ADDENBROOKE Marketing Consultant eaddenbrooke@coloradocommunitymedia.com

Financial

STRATEGIES

• China’s currency the Renminbi (RMB) was the fth most traded currency in the world last year.

• e U.S. share of global trade is about twelve percent, and the U.S. share of global GDP is about 25 percent. Yet the dollar’s share of foreign exchange, trade, debt, and exchange reserve is much higher, which is why the dollar is known as the world’s reserve currency.

• About 35 percent of all Treasury bonds are owned by foreign investors.

• e dollar’s role in foreign exchange markets has been mostly unchanged over the last

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