The Changing Role of the US Dollar in the Global Monetary System of a Multipolar World

Abstract

This research aims to identify possible global monetary system development scenarios in the context of the current United States dollar supremacy. The primary method used is foresight analysis, which is based on a combination of deductive and historical data and trend analyses. The paper outlines the main drivers of potential change and uses them as inputs for scenario analysis. The three considered scenarios are a continuation of the absolute dollar dominance, reduction of the dollar’s power and split of the world economy between multiple currencies, and the emergence of a new single prevalent currency. The main conclusion is that the second multipolar scenario resembles the current dynamics the most and is considered the baseline. However, the answer depends on the forecasting horizon as the scenarios have a certain sequencing. The dollar will probably maintain its supremacy in the short term. Its decline in the mid-term will give rise to a multipolar world, which can then, theoretically, lead to the emergence of a new dominant currency in the long term. The results might be used as a framework for further structured analysis of possible outcomes in this domain.

Keywords

• united states
• dollar
• hegemony
• reserve currency
• china
• multipolar world