A significant decline in international demand for dollars is highly unlikely

There are periodic predictions of a decline in the dollar’s international reserve currency role , with several possible explanations: China’s emergence as a major global economic power; An economic explanation: concern among investors at the United States’ fiscal and external deficits; A political explanation: tensions between the United States and many countries ; the reaction to the freezing of Russia’s foreign exchange reserves. But the dollar’s role has not diminished. Why? Essentially, because there is no sufficiently sized alternative to the dollar: The Chinese renminbi cannot be a major international reserve currency, for financial and political reasons; The euro-zone sovereign bond market is segmented ; The financial markets of the other countries that issue reserve currencies (United Kingdom, Japan, Switzerland, etc.) are too small. I t would actually be inefficient and costly to have several reserve currencies. So if there is a single dominant reserve currency, for it to no longer be the dollar, another currency must have the characteristics to be a dominant reserve currency (sufficiently large bond market and underlying economy, political clout, etc.). T his is clearly not the case.