What If US Dollar Loses All Value

When it comes to global economics, the strong position of the U.S. dollar is not negotiable with the level of significance it brings. Agreeably Bretton Woods Conference in 1944 the official dollar a world reserve currency. Thus, for over 70 years, the dollar made up of other currencies. This power convinced the United States of America that it became a pivotal agent of employing economic power not only to boost its own economic performance but also influence development across the globe as well.

At the basis of the dollar's role as the most-preferred currency, the dollar is a primary medium of exchange in international transactions. This eventually made more 90% of existence global transaction to use U. S. Dollar and most of the bank central resisters to carry on in dollar-denominated assets. Such an incomparable omnipresence of the Dollar endows the United States with significant power over the global economic system what facilitates Washington to utilize the dollar both as a weapon and protection in the field of international finances.

The very fact that the United States ensures that it has the capacity to impose financial sanctions as a powerful instrument in its diplomatic toolkit is, in essence, proof. The fact that the dollar serves as the world’s main currency, especially as a “reserve’’ currency, allows the US to have enormous power over foreign governments, and entities. To a large extent, this makes it possible for the US to effectively use its economic influence in way of political-military might for the use of its foreign policies. The latest events, namely, the sanctions slapped on Russia in retaliation of the seizing of Crimea and the Russian military actions in Ukraine, are just a few examples among many making evident this economic coercion's capacity to compel compliance and punish the transgressors.

Nonetheless, the relatively imperative position of the dollar in international finance field is doubted to be without fragility. With international rivalry verging on hot geopolitics and trade economics getting more intense, the cracks are already visible in the facade of dollar hegemony. Countries of this kind as Russia and China, which are dissatisfied with the United States' The coverage of the world, are negotiating deals and arrangements that can result in the removing privilege of the dollar in the global stage.

A concept that is proving more and more popular is the idea of progressive dollar shares among the major currencies, which would result in the dispersion of dollar influence, thus handing down the baton of reserves to other currencies. Defenders suggest that such a monetary system would prevent external instability, eliminate the danger of currency manipulation, and enable partner countries to grow together.

The United States, a country whose currency is a global benchmark, views the introduction of a multisided currency system as both challenges and opportunities. While untying the reserve status may result in such side effects as reduction of weight in the international affairs it can also boost the global community spirits and contribute to the achievement of the mutual goals. Through the redistribution of the globe's monetary power in an equally manner, the USA could create an international financial association which is more consistent and fair.

Nevertheless, the establishment of a multilateral currency system is not necessarily straightforward, especially if there is collapse of power of certain countries. It would mean not only frantic efforts to reach a consensus of all states, which are sometimes opponents or have different ideas on this issue, but also big reforms in international organizations and way they work. Last but not least, the consolidated clout of the existing authorities, often together with the momentum of the existing system, may therefore thwart the country's efforts to produce a vital change.

In the absence of a clear 'buy' position, the dollar's leadership can be forecast to survive for a long time to come. However, a similar outcome, complacency, may likely affect powering the potential of a nation. It is definitely suitable that the US notices the warning signs and rise to face the realities of the ever changing world of trade — the “global economy” if you will.

In a nutshell, the future of the dollar as a key reserve currency may face a high risk of shifting either from one dominant power to another or understanding how global power flow has shifted between states is happening on the one hand or going through the process of transitioning to become a system that is dominated by one of the major global players and on the other. As evidenced by its ascendancy, for now the dollar maintains its supremacy, the atmosphere seems unsettled and landscape of global finance is evolving. Whether the dollar stays the dominant or the new regulator takes the throne- this is the matter, which needs assisting decisions and adequate actions of the countries in the forthcoming period. While the process is pretty much unknown, the stage of evolution is full of opportunities and challenges meanwhile.