US dollar dominance is both a cause and a consequence of US power | Chatham House – International Affairs Think Tank

Although many countries would like to see an alternative to the US dollar, its dominance is unlikely to come to an end anytime soon. Michael Klein Senior Research Fellow, Global Economy and Finance Programme Mao Zedong was no monetary theorist, but his reflections on power help explain why the dominant role of the US dollar will persist. ‘Power grows through the barrel of a gun’, he said. One could add that currency power does too. Throughout history, the top global currency has tended to be that of the dominant military power. Sterling ruled when Britain had an empire ‘on which the sun never set’, as did the silver Denarius and gold Aureus when Rome had its time. Currency power is a derivative of national power – and guns count. The dollar is to international finance what the English language is to international communication. But it would be wrong to think that the dominance of the dollar will give way to the renminbi, for instance, simply because China is accumulating power relative

Although many countries would like to see an alternative to the US dollar, its dominance is unlikely to come to an end anytime soon. Michael Klein Senior Research Fellow, Global Economy and Finance Programme Mao Zedong was no monetary theorist, but his reflections on power help explain why the dominant role of the US dollar will persist. ‘Power grows through the barrel of a gun’, he said. One could add that currency power does too. Throughout history, the top global currency has tended to be that of the dominant military power. Sterling ruled when Britain had an empire ‘on which the sun never