published Tuesday, August 23rd, 2011

China, euro threaten U.S. dollar's dominance

If there is anything a lot of us don't like about U.S. dollars, it's that we have too few of them. And considering the fact that the dollar is the most important currency on the planet, lots of people besides Americans apparently feel the same way we do.

The dollar is a reserve currency. Foreign governments and banks have massive reserves of U.S. dollar deposits and bonds.

The dollar is also key to foreign exchange transactions.

But will the dollar keep its international dominance? That's a big question, because the euro of the European Union and the yuan of Communist China have become increasingly important on the world scene.

A recent report by the World Bank was not encouraging. It suggested that the U.S. dollar may lose its dominance in international commerce by 2025 -- just 14 years away!

It is not entirely within the power of the United States to control that. Many factors affect world commerce. But it would be unfortunate if the dollar's prominence in international finance seriously diminished because of our massive debt, or other factors over which we do have control.

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