Fed official says US dollar will remain as world's reserve currency

By Ovunc Kutlu

ISTANBUL (AA) - US Federal Reserve Governor Christopher Waller said Thursday he expects the American dollar to remain as the world's reserve currency, despite the wide use of the euro and the rise of Bitcoin.

"When people refer to the dollar and its reserve currency status, they typically mix together a variety of roles that it plays on the world stage," Waller said during his speech at a conference sponsored by the Global Interdependence Center and the University of the Bahamas at Nassau, Bahamas.

"For many decades, the US dollar has had an outsized role in the global economy, supported by the size and strength of the US economy, its stability and openness to trade and capital flows, and strong property rights and rule of law," he added.

Waller said almost 60% of global reserves in 2022 was the US dollar, followed by the euro with a share of approximately 20%.

The governor also said some believe cryptocurrencies like Bitcoin may replace the US dollar as the world's reserve currency, but most trading in decentralized finance involves trades using stablecoins that link their value one-for-one to the dollar.

"About 99% of stablecoin market capitalization is linked to the US dollar, meaning that crypto-assets are de facto traded in U.S. dollars," he noted.

Waller, in addition, said wider use of the euro as a reserve currency may have been held back by the lack of a deep and liquid market for EU debt, though there have been some recent developments in that respect.

"I do not expect to see the US dollar lose its status as the world's reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance," he concluded.