Five charts to start your day
Will the US dollar really lose its crown in the near future?
"Dedollarization" has captured the attention of pundits, laypeople and numerous emerging market leaders in recent years. However, when you look closely, it becomes apparent that this phenomenon is neither new nor surprising.
A glance at this historic data visualisation reveals a narrative that spans not just decades, but centuries. The ascent of the dollar to supremacy was not an overnight sensation but rather a gradual process unfolding over the course of the 20th century, shaped by geopolitical events and economic shifts.
The dollar's journey to dominance was propelled by a combination of factors, each contributing to its eventual hegemony. The robust growth of the United States economy, driven by rapid industrialisation and technological progress, provided a sturdy foundation for the currency's rise.
Additionally, the establishment of sophisticated financial markets in the US, along with the nation's pivotal role in both World Wars, further cemented the dollar's status as the premier international currency. The gold standard, once a cornerstone of the global monetary system, also played a crucial role in the dollar's ascent as countries grappled with maintaining the standard amidst economic shocks and evolving international trade dynamics.
However, the dollar's supremacy has faced challenges. The 1970s marked a turning point as the United States began running persistent balance of payments deficits, gradually undermining the dollar's position as the unrivaled leader of the international monetary system.
I'll end there – just watch the video.
Source: Eeagli
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