ok so let me just lay this out real quick because i see a lot of confusion around this topic
Trade side: pretty much every country invoices in dollars. oil, gold, wheat... all quoted in USD. shipping contracts too, mostly.
Finance side: the majority of international payments run through USD, dollar-denominated loans tend to carry lower rates, and something like 9 in 10 forex trades touch the dollar at some point.
Power side: if you wanna buy stuff on the global market you need dollars. and the US knows it... they can cut countries off just by blocking dollar access. that's a weapon.
Will it change? China, Russia, India are all pushing yuan and rupee settlements. but dollar still sits at like 60% of global reserves so... not happening overnight.
two questions i want to throw out there: why specifically are oil, gold and wheat priced in USD and not something else? and why do so many countries still take out loans in dollars even when it costs them more in FX risk?
honestly the whole fiat dominance conversation is getting old imo. global trade is already shifting and crypto is eating into that space whether people admit it or not. bitcoin becoming a mainstream settlement layer for international trade isn't some wild fantasy anymore, it's closer than most suits wanna acknowledge. just needs broader adoption and we're there.
one big thing nobody mentioned yet: liquidity. USD is liquid basically everywhere on earth. buyers, sellers, lenders... nobody has to stress about exchange rate headaches when the deal is in dollars. and yeah loans in USD often come with lower interest rates which is why businesses outside the US still go for them. the catch though is brutal: if your local currency tanks, that dollar loan just got way more expensive to pay back. people underestimate that risk constantly.
exactly this. and it cuts both ways. i've literally seen people demand repayment in dollars even between family members lol. like "i gave you X dollars, i want X dollars back" regardless of what the exchange rate does. dollar for dollar, no exceptions. people trust the dollar more than they trust their own government's currency and tbh... can you blame them?
did anyone actually try to answer the OP's questions or just vibe in the thread lol
the reason is pretty straightforward: the US has been the most economically stable and productive country on the planet for something like 75 years. yeah politics gets messy but they haven't defaulted on debt in forever. that track record is exactly what makes a currency become the global reserve. it doesn't swing wildly day to day, which other currencies absolutely do. most people would take a loan in their local currency if it were stable enough, but for a lot of countries... it just isn't.
this is exactly why bitcoin matters. the USD dominance isn't going away quietly, i get that. but the whole point of a decentralized currency is that NO country controls it. that's the thing that makes bitcoin genuinely different from yuan or euro or anything else trying to challenge the dollar. every country can participate without one nation holding all the cards.
can someone explain the "loans cheaper in USD" thing more clearly? like mechanically why?
also the BRICS single currency idea went nowhere, but Russia, India and China ARE settling some trades in local currencies now so that's at least something moving.
also OP you forgot that bitcoin itself is priced in USD which is kinda ironic given this whole conversation. the US economy is massive and has been stable for a long time, that's really the core of it. dollar involved = less complexity in a deal, simple as that.
USD is just... available. almost everywhere. and the biggest stablecoins are all dollar-pegged, which tells you everything about where trust sits right now. private businesses stash savings in USD all the time. stablecoins are starting to pressure that a bit but how they'd behave in a serious market crash? nobody really knows yet.
since the dollar established itself as the go-to currency globally, pricing exports and imports in USD just removes a whole layer of friction. it's basically a neutral mediator that everyone already holds and accepts.
afaik in most places i know people don't actually take personal loans in USD unless it's from someone abroad or outside the local banking system. domestically it's local currency loans from banks. the dollar loan thing is more of a corporate and sovereign debt story than a regular person story.
de-dollarization talk has been loud for years but the dollar still punches above even what the US economy alone would justify. that tells you something about how deep the structural dependence runs globally. it's not just about the US being big, it's about how much of the world's financial plumbing was literally built around the dollar.
the petrodollar agreement between the US and Saudi Arabia is where a lot of this really took off. every country needs to import fuel and when the biggest oil sellers started pricing in dollars... well everyone needed dollars. that created this self-reinforcing cycle. Russia and China do operate more independently from this system but most of the world got pulled into the dollar orbit through energy alone. that's the part people skip over when they talk about this.
this conversation has come up here many times ngl. but the short version: the US has one of the largest economies on earth, it got there early, and it built influence in basically every direction: tech, military, finance, trade agreements. dollar dominance didn't happen randomly, it was built over decades. what people are noticing now is just the result of all that groundwork laid long before most of us were paying attention.
at the end of it all it's a trust game. the US has mountains of problems: debt, inflation, political chaos... and yet global investors still park capital there because it's seen as the most liquid and reliable place on earth. as long as that perception holds, dollar demand stays strong, which keeps the dollar strong, which reinforces the perception. it's a loop. the cycle feeds itself.
also worth adding that tons of countries hold USD as their actual reserve currency, not just for trade.
on the oil pricing question: it's about those agreements with producing nations. if Saudi Arabia switches to pricing oil in yuan that genuinely reshapes everything, which is why the US gets nervous every time that rumor surfaces.
on loans: i think the dollar loan thing is more about banks offering USD deposit accounts globally rather than individuals in random countries borrowing from US lenders directly.
having a single dominant trade currency genuinely simplifies things. every country already holds dollar reserves so pricing commodities in USD avoids the whole multi-currency conversion mess. governments and big companies borrow in USD partly because of relatively lower rates and partly because it's seen as stable. international investors move in and out of dollar assets constantly and that demand keeps the whole system running.
no other currency right now has the depth and liquidity the dollar has. creditors and debtors both get reliable long-term stability from it, year after year. yeah the US benefits disproportionately from issuing the reserve currency, that's a legitimate gripe. but the rupee and the yuan just aren't there yet in terms of reliability. gold alternatives sound nice in theory but liquidity becomes a real problem real fast.
the yuan growing in importance doesn't actually threaten the dollar, it just adds an option for specific bilateral deals. and here's the thing nobody says out loud: no major country actually wants the dollar to collapse. they hold too many dollar reserves and treasuries. a dollar collapse creates a chain reaction that wrecks everyone, not just the US.
the banking settlement infrastructure was literally built around the dollar back when it was gold-pegged, pre-1970s. SWIFT is predominantly US-influenced. China and Russia want their own system but it's moving incredibly slowly. and here's the practical question: do you think US exporters of oil, wheat, gas are gonna start accepting yuan or rupees? the answer is no, not anytime soon. also local currencies in most countries lose value way faster than the dollar does, which is exactly why dollar loans look attractive despite the FX risk.
to actually answer the loan question: dollar loans are cheaper because the dollar is less exposed to inflation and currency devaluation than most local currencies, so lenders charge less risk premium.
on the BRICS currency: it collapsed as an idea because the member economies are wildly different in structure, China's size creates the risk of it just becoming a stealth yuan zone, and inflation rates plus debt levels across members are all over the place. the economic asymmetry killed it before it started.
look i'm not a fan of low-effort posts in this thread but let me say this clearly: the dollar IS losing ground, slowly. there are bilateral trade deals happening right now that cut the dollar out entirely, euro, yuan, rupee, whatever works between two specific countries. it's not a flood, but it's real.
the dollar is still more stable than most alternatives so the transition is gonna be slow and messy. but the direction of travel is there if you're paying attention.