The US dollar's status as the top global reserve currency is set to weaken, although no currencies will substantially challenge its supremacy in the short term, said economists on Monday.
"The United States is now facing quite a revolt against its financial hegemony," said Gal Luft, co-director of the Washington, DC-based Institute for the Analysis of Global Security.
The hegemony, centered on the dominant role the dollar plays in the global economic and financial system, has affected the interests of other countries and triggered increasing opposition from those countries, said Ding Yifan, deputy head of the China Society of World Economics.
"The momentum of de-dollarization has been building up for quite a long time and has recently accelerated," he said.
They made the remarks at an event to launch the new bookDe-dollarization: The Revolt Against the Dollar and the Rise of a New Financial World Order, authored by Luft and Anne Korin, who is also a co-director of IAGS. The event was hosted by the International Monetary Institute of the Renmin University of China.
Now the dollar accounts for about 80 percent of international payments. But as Luft and Korin have pointed out in their book, "the dollar is facing a challenge by a growing coalition of states and nonstate actors who are fed up with what they believe to be America's overuse of sanctions and other coercive economic measures, its extraterritorial legal outreach and its treatment of the global financial system as its fiefdom".
As a result, more and more countries have sought to carry out trade using nondollar currencies and build mechanisms to circumvent the dollar-dominated financial system, leading to the weakening role of the paramount currency.
"We believe the dollar could lose its status as the world's dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments," wrote JP Morgan strategist Craig Cohen in a note on July 10.
Reflective of that declining importance, the dollar's share in the global currency basket and in international trade has been on the decline, according to the book.
According to the US Department of Treasury's Borrowing Advisory Committee, the dollar share of global foreign exchange reserves has steadily come down from 72 percent in 2000 to 62 percent now, according to the book.
But the de-dollarization process will be a long-term evolution, Luft said. "We do not believe the yuan or any other single currency will replace the dollar (any time soon)."