Dollar Dominance Eroding Slowly but Surely

Opinion by Jomo Kwame Sundaram (jakarta, indonesia)Tuesday, September 01, 2026Inter Press Service JAKARTA, Indonesia, September 1 (IPS) - The US dollar’s role as the world’s reserve currency has been eroding gradually for decades. However, various US policies, including recent deliberately unexpected actions, have at times accelerated de-dollarisation. Jomo Kwame SundaramDollarisation Despite warnings from Keynes and others about its likely problems, Harry Dexter White, the head US delegate, imposed an indirect gold standard at the 1944 Bretton Woods conference.By fixing the gold price in dollars, the US currency became the world’s reserve currency, with other currencies pegged to it at fixed exchange rates. With this indirect gold standard, the metal’s price was fixed in US dollars. Other currencies were pegged to the dollar, strengthening its role as the dominant currency. Other arrangements that could have mitigated the problems and adverse consequences of the dollar system were effectively rejected by the US at Bretton Woods. Ninety per cent of foreign exchange market transactions now still involve the dollar. Most central bank reserves are still denominated in dollars, while t...