The dollar has dominated global finance for a century, but now its influence is challenged by BRICS nations and the growing acceptance of Bitcoin.
Historical Role of Paul Warburg and Harry Dexter White
The beginning of the dollar's global dominance is linked to Paul Warburg and Harry Dexter White. In the early 20th century, Warburg advocated for the creation of a central bank to promote the dollar internationally. He helped draft the 1913 Federal Reserve Act, which laid the foundation for the dollar's global influence. Later, Harry Dexter White played a key role in post-World War II global economics by orchestrating the Bretton Woods System, further solidifying the dollar's position.
Trump's Return: A Threat to Established Institutions
Donald Trump's return to the U.S. political scene brings disruptions to established institutions. His policies are causing concern among investors, as they may undermine trust in dollar assets. Trump and his team are challenging existing rules and proposing measures that could weaken the resilience of the dollar system. For example, the proposal to levy a fee on interest payments to foreign bondholders draws attention to changes in established norms.
Falling Confidence on the International Stage
The U.S. is losing international confidence due to increased sanctions and weakened trade and military alliances. Reduced exports and reinforced sanctions against Russia unsettle foreign investors. This creates conditions for the growth of alternative currencies and systems being developed by BRICS nations. Cryptocurrencies like Bitcoin also offer new opportunities for global reserve diversification.
For the dollar to maintain its dominance, it will be challenging if global alliances are disrupted and internal instability grows. New currencies and systems are becoming increasingly attractive to the global community.
