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The US dollar is a reserve currency – but does this solution work well?

US dollar

Surely you all know that the US dollar is the world’s reserve currency. This financial system has ruled since 1944. But is it good for the trade to be ruled by one currency?

Let’s take a look at the pros and cons of the US dollar.

Since 1944

The US dollar has been a global reserve currency for a very long time. It is a centralized currency, but it is no longer backed by gold as it used to be. In essence, world trade also depended on the dollar, and for many years such an agreement seemed to work well.

The US used the power of control over the global USD supply to manipulate the global business environment. Customs and sanctions have been imposed on various countries, China, Mexico or Canada, for example. This has affected all countries, including the countries of the European Union. In 2014, sanctions were imposed on Russia (due to the annexation of Crimea).

Every action…

Many countries today are trying to disconnect from this system and agreements are emerging where the US dollar does not figure at all. It can be simplified to say that “every action has its reaction”.

What is the problem and possible solution?

The centralized system has proven several times in history that it can be easily abused. But as long as the centralized system is still in the forefront, such actions will increase.

Decentralization could be the solution. Due to its nature, it does not give anyone the opportunity to dominate and, for example, blockchain technology can ensure that all actions are visible and traceable.

Conclusion

If a global system is needed, it is certainly better if it works on a decentralized model that does not give anyone the opportunity to use one currency for purposes of manipulating economy or business to one’s advantage.

Source: zerohedge.com

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