Why does the dollar retain its international reserve currency role?

There is no noticeable sign of any lasting decline in the dollar’s international reserve currency role. But major changes are affecting the factors that underpin the dollar ’s role as the dominant reserve currency. The structural drivers of the dollar’s role as the dominant reserve currency are disappearing : the rising US external debt is cause for concern; for political reasons, some countries are reducing their holdings of dollar-denominated assets; above all, central banks’ foreign-exchange reserves are decreasing, so the investment in dollars of new foreign-exchange reserves will no longer finance the US external deficit and sustain the dollar’s reserve currency role. Dollar holdings are therefore becoming the domain of private investors. But cyclical factors are sustaining the dollar’s reserve currency role: dollar interest rates are higher than those in other currencies; returns are higher on US equities than on other countries’ equities; the euro zone has gone from one crisis to the next since 2010 (peripheral countr y crisis , political risk in France, the Italian crisis), which deters investment in euros. The fact that the dollar’s reserve currency role is now being sustained by cyclical and no longer structural factors may be a concern, since these factors could disappear and a severe financial and economic crisis would unfold in the United States if the dollar lost its reserve currency role.