Since the end of World War II, the dollar has been the world’s most important currency. It is the most commonly held reserve currency and the most widely used currency for international trade and other transactions around the world. The centrality of the dollar to the global economy confers some benefits to the United States, including borrowing money abroad more easily and extending the reach of U.S. financial sanctions.
But some experts argue that dollar supremacy comes at a cost. Increased foreign demand for U.S. bonds bids up the dollar and makes U.S. exports less competitive, resulting in trade deficits and lost jobs. And the dollar’s role in many global transactions puts pressure on the U.S. Federal Reserve to act as the world’s lender of last resort during economic crises, such as the one triggered by the coronavirus pandemic. Despite the concerns about the dollar’s power, many experts say it is unlikely that the greenback will be replaced as the leading reserve currency any time soon. As a country's currency weakens, its goods exports should become cheaper and thus more competitive.