Last year, 89 percent of global foreign exchange transactions were executed in U.S. dollars.

That important statistic was reported last February by the Bank of International Settlements (BIS), also known as the bank of world central banks. The BIS acts in that capacity by offering international cooperation in support of central banks’ mandate for monetary and financial stability.

To understand the ongoing discussion about the role of the U.S. national currency in world economy, it may be helpful to begin with a brief outline of the role of money in an economy.

Money is used (a) as a unit of account (standard of value), (b) as a means of payment (medium of exchange), and (3) as a store of value (something you want to hold).

The fact that the dollar was so widely used to express value (unit of account) and to settle international business transactions (means of payment) shows that the dollar had no credible alternative as the global transaction currency.

The function of the dollar as a global store of value is essentially reflected by the dollar’s share in official currency holdings. Those are dollar balances held as central banks’ currency reserves.

The dollar is the world’s key currency

The International Monetary Fund published last Wednesday its latest report on currency composition of foreign exchange reserves showing that dollar holdings accounted for 57.13 percent at the end of March 2026, an increase from 56.42 percent at the end of 2025.

The dollar as a reserve asset is now followed by the euro (20.3 percent), the Japanese yen (5.44 percent), pound sterling (4.40 percent) and the Canadian dollar (2.48 percent). The Chinese renminbi’s share has stabilized around 2 percent.

As things now stand, the dollar remains far above all other major world currencies as a preferred store of value and an essential monetary policy instrument. But the current share of dollar-denominated world currency reserves has fallen considerably below this century’s peak of 71.52 percent in 2001.

Arguments about dollar’s declining role in world economy focus on a fluctuating demand for dollar-denominated assets. And that argument completely ignores the fact of vastly dollarized global economic relations and a fully dollarized international system of money and finance.

Indeed, those 89 percent of global financial settlements took place within an international monetary system where the dollar serves as the key currency, and where the relative values of all other currencies are expressed in their dollar exchange rates.

The view of the dollar’s allegedly declining status in world economy is a political conjecture about the way the United States manage the world order it created and still dominates with its unmatched economic, political and military power.

A sound dollar is the world’s public good

Take, for example, the “de-dellorization” issue that wants to circumvent the dollar by settling bilateral business transaction in national currencies. That process is still conducted with notional dollar values, because the partners to the deal operate with their currencies’ dollar values.

And then what do they do with those national currencies that are unsuitable as reserve instruments or means of international payments? If they want to use those currencies to buy gold for their reserve holdings, they still must have dollars to acquire gold. And if they hold those national currencies for further bilateral deals, they are narrowing their trade opportunities and squandering their incomes in suboptimal business deals.

That said, widespread complaints that the U.S. is “weaponizing” the dollar to exercise unrestricted economic and political power through unilateral sanctions, or “long arm” jurisdictions, are not without merit.

The U.S. may wish to review those practices. Underpinned by America’s overwhelming economic and military power, patient diplomacy may be a better way of dealing with problems in a nuclear age where the MAD (Mutual Assured Destruction) doctrine is the ultimate guardrail to humanity.

The U.S. has everything to gain from a world of fair and free trade. The fair part refers to cases where the U.S. must even out the playing field for American businesses. Times when U.S. tolerated import tariffs on American goods to countries that could sell virtually tariff-free on American markets should be done and over.

Washington should also consider that it is the banker to the world because the dollar remains the key vehicle to global trade in goods and services. That is a privilege and a responsibility to manage the dollar as a safe, universally accessible and stable instrument of economic growth and prosperity.

The sound management of the dollar would bring down prices of gold and other highly speculative assets that were created on the idea of America’s “benign neglect” of its world currency.