Short Notes

by Michel Schiffelholz, CIO

Sustainability of the USD as the Dominant Reserve Currency

Monday, 26 May 2025 16:38

Chart analysis:

Each blue bar represents the period during which a national currency was considered the world's primary reserve currency.

We observe a chronological succession of powers:

• Portugal (~1450–1530)
• Spain (~1530–1640)
• Netherlands (~1640–1720)
• France (~1720–1815)
• United Kingdom (~1815–1920)
• United States (~1920–present)

Key comments:

1. Average duration of hegemony:

• Around 90 to 110 years, which gives weight to the idea that reserve currency status is cyclical and linked to the economic, military and commercial power of a country.

2. Current position of the US dollar:

• In place for around 100 years, which fuels debates on a possible transition to another currency (euro, yuan, or cryptocurrencies?).

3. Transition factors:

• Relative economic decline
• Excessive debt
• Loss of international confidence
• Rise of a competing power (e.g. China)

Current context:

With geopolitical tensions, financial sanctions, the fragmentation of global trade and the emergence of BRICS, this graph takes on particular resonance. It invites us to think about the sustainability of the dollar as the dominant reserve currency.

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