There is current uncertainty which is clearly reflected in the financial markets. Investors are running toward assets that are thought to be safe, such as gold, U.S. Treasuries and the dollar. Many around the world still flock to the U.S. on a massive scale, but a lot of the present insecurity comes directly from the White House.
Some are seeing more and more commentaries around the question of whether a shift is taking place, slowly but surely, from the dollar toward other currencies.
JPMorgan recently wrote, “We believe the dollar could lose its status as the world’s dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments.” Also in this month, Bank of England Gov. Mark Carney claimed that the dollar’s status as a hegemon is putting the global economy under increasing strain and needs to end.
That the dominance of the dollar is being questioned is not surprising at the present time.
Current and future U.S. policies look vague or possibly nonexistent. Countries such as China and Russia are taking an increasingly assertive stance.
The supremacy of the U.S. has been lessening, and there are mounting doubts about whether the country will continue to support the international system that it has largely built up and shaped itself.
Things are shifting in a way that seems to suggest that countries want to become less dependent on the dollar. Whereas China owned 14 percent of U.S. government paper in 2011, that percentage has dropped to 7 by now.
About 70 percent of the currency reserves of central banks consisted of dollars around the year 2000, but now this share is currently 60 percent.
The dollar will not be replaced as the global currency anytime soon. At the same time, but the measures that countries are taking to reduce their dependency on the dollar show they are anticipating that a post-America era is in the making.