The financial economy of the United States has experienced a period of upheaval with the decline of significant banks. Furthermore, there has been a notable global trend toward the reduction of the use of the US dollar for transaction settlements.
This shift is evidenced by Russia’s declaration of intent to pursue de-dollarization and by China and France’s successful completion of an LNG gas trade utilizing the Chinese yuan. As a result of these developments, there has been a decrease in reliance on the US dollar.
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However, even if there is a very meager chance of the US dollar collapsing, the possibility can’t be neglected.
Could the US dollar collapse?
The possibility of a currency collapsing is when that currency loses all its use cases and value. A currency, or money in general, has value because of the belief that it has value and also because of the value given by the government.
A currency can collapse for various reasons. These include hyperinflation, political and economic instability, and the high debt of a country.
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However, unlike other currencies, the US dollar has a special status globally. Since it is a global reserve currency, it is also touted as the safest and most stable currency. With the US economy still the biggest worldwide, the chances of the US dollar collapsing are very thin. Yet, this is not an improbable situation.