Abstract

The air resounds with talk of “dedollarisationµ, “the end of American financial supremacyµ, as a rising number of Governments, especially but not only in the global South, express a wish to develop alternatives to the dollar as an international currency. Much of this is prompted by the US Government’s overt weaponisation of the dollar and the dollar payments system to sanction individuals and States it regards as enemies. This essay argues that dollar hegemony will end – but not in the foreseeable future of the next one or two decades. It describes the dollar’s quantitative dominance, and its institutional incumbency advantages. Then it shows the limits on alternatives, including bilateral trade agreements in national currencies (as in the Russia-Indian trade negotiations), upgrading the IMF’s Special Drawing Rights to an international currency, the proposed BRICS currency, and the wide use of the renminbi. But by 2040, we may look back on this period as the early stage of a new international currency arrangement.