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24 June 2025 / Essay
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Copy LinkSurging geopolitical risk and growing global conflicts, along with a concomitant search for economic security, are challenging what has long been a pillar of the global financial system: the US dollar’s hegemony.
This confluence is prompting countries around the world to prioritize financial diversity over efficiency, underscoring that no single currency is likely to emerge as the dollar’s successor. Instead, the global financial system is likely to employ a “third way” featuring multiple alternatives without any one currency dominating.
This will be a stark change. The dollar has been the most-sought-after currency for trade, financial flows, and foreign exchange reserves since the end of World War II—especially since the Bretton Woods system broke down in 1971 and the US abandoned the gold standard. A recent European Central Bank (ECB) paper confirmed that the dollar remains the currency of international choice, with the euro a very distant second.
Both the US and the world have both benefitted from this system. The Federal Reserve has enjoyed the “exorbitan
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