With each year the American dollar is shrinking in percentage as the world’s currency supply.
The implications could mean a serious decrease in the dollar’s influence as countries around the world look for alternatives.
When compared to other prominent world currencies, the dollar has been experiencing a 15-year low. That’s according to the International Monetary Fund. And, this indicates that more countries are willing to use other forms of currencies to do business. Experts say it’s a fault of the US banking system and the Federal Reserve.
If the dollar weakens in influence worldwide, it will be harder for the US to print money and pay its debts. In addition, looming battles over budget sequestration in Washington could rekindle long-standing fears of fiscal stability.
”While the US currency is still considered “top dollar” it holds $3.72 trillion or 62 percent of the $6 trillion in foreign exchange holdings in the world’s central banks. Other world currencies are starting to become more prominent.”
The Japanese yen, Swiss franc and what the IMF classifies as "other currencies" such as the Chinese yuan are gaining. Experts criticize President Barack Obama for letting Wall Street take the reigns on the direction of the US Dollar.
For a country with a budget deficit in excess of $1 trillion a year, the consequences of the US losing its rank as the world's reserve currency could be severe. For now, markets aren’t acting like the US dollar is in trouble, but many wonder how long this will last.