The beginning of the end for the dominance of the dollar?

The aim of this report is to shed light on the background to the dominant position of the US and the dollar within international finance, what form this dominance takes, and existing threats. US financial dominance manifests itself through the status of the dollar, the ability to both lend and borrow extensively, the centrality of US financial markets in international financial networks, and US influence over international financial institutions. The US position of strength can largely be explained by economic size, the extent and sophistication of US financial markets, and how global power status allowed the US to shape financial institutions such as the IMF and the World Bank. There are long term challenges to US financial dominance. The main contenders are China and the eurozone. The US' own actions can pose a threat if the use of financial policy instruments against foreign countries results in these countries establishing parallel financial systems, facilitated by financial technological development. Failure of the US to manage its budget deficit and current account deficit also poses a threat to maintaining financial dominance. The possible rise of a multipolar financial world order could have far-reaching effects for the US and the rest of the world