The US dollar has been the world’s reserve currency for close to 80 years. It started to displace the British pound in the 1920s, and secured the undisputed mantle after World War II. The dominance of the greenback is entrenched in the sheer size of the US economy. It is the world’s largest, accounting for more than 25 per cent of global gross domestic product. It also has a stable political backdrop, deep capital markets and a strong rule of law, as well as a powerful military. Even so, the US dollar’s dominance has declined in recent decades. Is the mighty greenback at risk of losing its mantle as the world’s reserve currency, and what implications might that have for financial markets?

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