Why the US dollar is the world s currency and how to understand it

In 1792, the U.S. dollar formed a currency zone in 13 colonies, and the United States was only a country with a population of 4 million at the time. By the end of the 19th century, it had become the most powerful country in the world. By the outbreak of World War I in 1914, the United States had a larger economy than the other three largest countries

Great Britain, Germany, France, and even the sum of them, which makes the position of the dollar increasingly prominent.

During World War II, the international monetary system was in shambles. In order to solve this chaotic situation, in 1943, the U.S. Treasury White** and the British Treasury adviser John Maynard Keynes respectively designed the post-war international monetary and financial system based on their national interests, and proposed two different plans, namely the "Wright Plan" and the "Keynes Plan".

The Wright Plan "advocates the abolition of foreign exchange controls and restrictions on the transfer of international funds by various countries, and the establishment of an international stability organization to issue an international currency with which the currencies of various countries will maintain a fixed ratio, that is, the currency will be pegged to the US dollar and the United States." The currencies of Member States shall be fixed against the Unistat and shall not be depreciated without the approval of three-fourths of the voting rights of the Member States. The "Keynes Plan" started from the lack of reserves in Britain at that time, and advocated the establishment of a world-class bank to settle the claims and debts of various countries through its deposit account transfers.

At the end of World War II, Italy surrendered, Germany turned to strategic defense on the Eastern Front, Japan had lost the ability to conduct large-scale campaigns in the Pacific, and their domestic economies were close to collapse; The economic power of Britain and France was also severely damaged in the war; The situation of the Soviet Union was the same as that of Britain and France, and the Third Five-Year Plan was invaded by fascist Nazi Germany before it was completed; Only the United States made a fortune in the war, and its economy developed like never before. In 1945, the gross national product of the United States accounted for 60% of the gross national product of all capitalist countries, and the reserves of the United States increased from 100 million US dollars in 1938 to 100 million US dollars in 1945, accounting for about 59% of the world's reserves, equivalent to 3 4 of the world's largest reserves, which made it ascend to the position of the leader of the capitalist world alliance. In this situation, an international monetary system centered on the US dollar was formed after World War II.

In July 1944, on the eve of the imminent victory in World War II, the 44 Allied powers in World War II, organized by Britain and the United States, convened a 730-person "International Monetary and Financial Conference of the United and Union States" at a hotel in Bretton Woods Village, New Hampshire, USA. The International Bank for Reconstruction and Development Agreement, collectively known as the Bretton Woods Agreement, began the Bretton Woods system of international currencies centered on the US dollar.

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1. Is the U.S. dollar an international currency?

The U.S. dollar is the international currency. After the Bretton Woods Conference, ** was abolished and the US dollar was changed to the international currency, but the US dollar is still pegged to **, so that the ** relationship between countries can only be circulated in US dollars.

2. United States dollars

The U.S. dollar, is the United States of America.

Republic of El Salvador, Republic of Panama, Republic of Ecuador, Democratic Republic of Timor-Leste.

Legal tender of the Republic of the Marshall Islands, the Federated States of Micronesia, the Republic of Kiribati, and the Republic of Palau. The dollar banknotes in circulation are the editions of banknotes issued since 1929.

It appeared after the passage of the U.S. Minage Act in 1792. The current dollar is issued by the US Federal Reserve System.

Control. Since 1913, the United States has established a federal reserve system and issued federal reserve bills. More than 99% of the banknotes currently in circulation are Federal Reserve Bills.

The issuing authority for the US dollar is the Congress, and the Federal Reserve Bank is responsible for the specific issuance business. In World War II.

Later, continental European countries reached an agreement with the United States to use the dollar for international payments, after which the dollar was widely used as a reserve currency in countries outside the United States and eventually became an international currency.

3. International reserve currencies

The international reserve currency refers to the international monetary funds held by a country that can be directly used for international payments, and is a part of the international solvency that can be used at any time to maintain the exchange rate of its own currency or to intervene in the foreign exchange market. With the development of foreign economy and changes in the international monetary system, monetary funds as international reserves have also changed. First world war.

Before, the pound. It was once capitalist.

The U.S. dollar rose to become the main reserve currency during World War II and replaced the British pound as the main reserve currency after World War II.

The currency is guaranteed by the best credit, and the US dollar can become the world's currency based on the following factors:

1. The U.S. dollar is pegged to oil. The United States controls the major oil producers in the Middle East, which account for 70% of the world's oil exports. The U.S. requires oil exporters to price and settle in dollars, which artificially creates demand for dollars.

2. The United States controls the world's largest ** exchange (NYSE) and the world's largest ** market. Currently, New York remains the best place in the world for corporate financing. The United States can remotely control the economies of countries around the world through ** transactions and ** transactions.

3. Strong military force. The United States has more than a dozen aircraft carriers, and its strategic projection capabilities are extremely strong. It has armies in all strategic points of the world.

The United States can exert significant influence on the politics and economy of the target country through military, political, and economic means to ensure the strong position of the U.S. overseas interests, including the dollar. It can be said that the hot events in the world at all stages since World War II are related to the United States. By dismantling the European Union, Arab countries, and controlling South Korea and Japan, the United States attacks the sovereign currencies of overseas countries and, if necessary, strengthens dollar hegemony.

4. The United States controls core technology and high technology. The United States ensures that the United States is always at the top of the industrial chain and always has a first-mover advantage by controlling core technologies and high technologies such as chip manufacturing, computer operating systems, and root servers, which can also be recognized by the dollar.

5. The United States is the superpower with the highest GDP in the world. The interests of the United States and the world's great powers are closely linked. Once the United States has a cold, the whole world coughs violently. It's too early to talk about cuts with the United States.

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The United States has a profound impact on the world economy.

After World War II, the U.S. economy rose rapidly to become the most powerful economy in the world at the time. At this time, the United States launched the "Bretton Woods system", pegging the US dollar to **, and became the dominant global reserve currency. Its GDP accounts for more than 20% of the world's total GDP, making the US dollar one of the most important currencies in the world.

The status of the US dollar as a global currency has had a profound impact on the world economy. It allows the United States to raise funds at low cost, while also increasing the economic dependence of other countries.

The reason why the US dollar can also be used globally is that it is widely recognized by countries around the world, and it is usually highly credible. In fact, the US dollar is not a US ** sale, but a US Federal Reserve meeting, and the Federal Reserve meeting is an independent body, which controls the total number of US dollar sales, and the Fed meeting only needs to bear the US Congress, and does not need to obey the orders of the US **.

The United States is at the forefront of the world in cutting-edge science and technology, education and culture, defense industry, financial industry, and so on. It is a powerful military force of the United States, which can ensure the security of trade and trade flows around the world. The industry's leading scientific and technological strength can also ensure that as long as the United States is willing to sell certain new technology products, you can obtain high-efficiency profits, and also lay the foundation for the national competitiveness of the US dollar.

The US dollar is relatively stable, and since World War II, the purchasing power of the US dollar has not changed much.

Secondly, the United States is the world's largest importer of goods, and imports from the United States chain orange countries must be paid for in dollars, which means that the dollar has a natural advantage as an international currency.

The U.S. dollar is the world's most important foreign exchange reserve currency and international settlement currency for two reasons: on the one hand, the United States has super international strength; On the other hand, the United States has a large number of ** reserves. In addition, there are two main conditions for becoming a world currency: first, a country has only a strong international strength (including goods and services);

21. The reason why the currency of a country with a shortage of countries can be used as a world currency is that it must have a large number of ** reserves (in 2019, the statistics of the World ** Association showed that the United States ranked first with 8133 tons of ** reserves).

The functions of the world currency are: first, as the world currency, it can carry out the main international settlement, because of its high stability, it can make the holder not affected by local inflation, and the international importers and exporters are willing to use this currency for international settlement;

Second, as the world's currency, it is also the main foreign exchange reserve asset of the world's central banks, and the central banks of various countries will regard it as the best reserve to refer to the general, and at the same time it is more convenient than the storage and use of the world's currency, so everyone is willing to reserve the world's currency.

1.Because the political situation in the United States is stable, although the United States has not been established for a long time, the United States has not been in chaos since its founding, and the dollar effect has not changed in wartime or peacetime, but other countries such as ** have a long history but a very short monetary history (less than 100 years), so any currency holder will take into account such a problem, if the country ** falls, then the currency is just waste paper (refer to the Iraq War, all the arrears of France during the Saddam period were invalidated, and the dinar was revalued)

2.Moderate purchasing power, in fact, the yen is also a world currency, but the purchasing power of the yen is too low to be traded, and the euro has a short history, and it takes time to enter the world currency trading market, so the dollar is used as a world currency.

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Not arrogant or impatient, we continue to work hard to move forward.