Dollar’s dominance comes under threat
America is losing its grip on its status as issuer of the world's reserve currency.
For 70 years, the US dollar has been the world's dominant currency. Most financial transactions across the world are conducted in dollars. Central banks hold around 60% of their foreign currency reserves in greenbacks.
But while it's "slow work" undermining the dollar's deeply entrenched status as the world's reserve currency, the US government seems to be doing its best, say Swaha Pattanaik and Edward Hadas on Breakingviews.
The "endless threat of default" and "ideological extremism" evident in Washington is certainly a powerful way to erode confidence in the currency. "Military misadventures" in recent years haven't helped either.
There are already signs that dollar dominance is waning. Central banks have diversified their holdings, with the yen and Swiss franc becoming increasingly popular in recent years. And companies are more inclined to issue debt in other currencies. Two Chinese oil groups have now issued bonds in euros.
Moreover, says Andrew Critchlow in The Daily Telegraph, given the ongoing increase in the commodities China consumes, raw material prices may soon be quoted in yuan rather than dollars. Beijing is trying to encourage traders to bypass New York by setting up a network of commodity markets centred on Hong Kong and London.
Oil-exporters' cartel Opec is also "agitating" for a shift away from dollar pricing for oil. In the currency markets, the "de-Americanised world" that China has been calling for appears to be slowly taking shape.