The US dollar is facing its toughest test lately as de-dollarization is advancing around the globe. Several alliances are rewriting trade deals to settle cross-border transactions in local currencies and not the US dollar. Emerging economies are looking to uproot America’s dominance in the world’s financial structure.
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While the US dollar is still the dominant currency, the threat to its hegemony is real and must not be taken for granted. Nipping the de-dollarization agenda in the bud could make America’s authority continue well into the next decade. The White House must take these necessary steps to maintain the US dollar’s global supremacy.
What Should the US Dollar Do to Maintain Its Global Supremacy?
First and foremost, the White House and the Feds must forget foreign countries and focus on maintaining macroeconomic stability in the homeland. This means that they need to reduce the national debt and bring back the lost confidence in the US dollar.
Trust in the US dollar is what made the currency great, which is now eroding due to the $36 trillion debt. The White House must also tackle inflation and bring it under 2% and remain consistently below the number for more than a year.
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Secondly, and after the first point is taken care of, the US must start focusing on foreign countries. It includes strengthening global alliances and reaffirming free trade agreements that benefit both sides. In this way, the US can remain the center of global commerce, reinforcing confidence in the US dollar.
Finally, the White House must take bold steps and be the leader in digital currency and fintech, not just the US dollar. Other countries are racing ahead in CBDCs and other fintech solutions, while the US is lagging. Staying ahead of the curve would make emerging economies dependent on the US for new technological updates.