Ken Rogoff
Is the world giving up on the US dollar? - The Global Story (September 2, 2026)
Link.
He recently wrote a book called "Our Dollar, Your Problem."
The US dollar is held all over the world, which lets the US borrow more.
Other countries need to hold dollars for practical purposes. For example, Japan and the Middle East need to hold dollars to manage trade and finance. Nobody needs to hold other currencies, like the Canadian Dollar, to manage their trade and finance.
The US dollar as a reserve currency is mostly great. It means all Americans, not just the US government, have a lower borrowing cost.
The US dollar is the lingua franca of international trade. Suppose Australia and Argentina are trading. The Australians and Argentinians could work out the transaction with local currencies but the Australians don't want to hold Argentine pesos and vice-versa. So the US dollar is the common denominator, but not always. The Euro and Yuan are also widely used.
In 1900, the British Pound was the lingua franca. Before that, it was the Dutch currency.
After WW1 and WW2, the US had all the cards. The US was half the world economy by some measures back then. They came up with the Bretton Woods system. Participating countries would fix their exchange rate to the US dollar and they could exchange dollars for gold if they wished.
In 1971, Nixon broke the gold standard and dollars could no longer be exchanged for gold. The Europeans were furious when this happened.
In the mid-1980s, the Japanese stock market was worth more than the US stock market. The US made them cut their currency in half, but in the 80s, it was looking like the Yen could be a USD contender.
The Euro has been the most serious challenger, but they had a bunch of debt issues in the 2010s.
If the dollar is the reserve currency, it bids up the price, which makes it cheaper to import and more expensive to export.
There are many factors that bid up the price of the dollar: the US is a tech giant, an agricultural powerhouse, the US is a military power, etc.
The Chinese currency is more important now that it is not as fixed to the US dollar.
The first thing that will happen is that the dollar will be on top, but people will demand a much higher interest rate on it.
He thinks it's very likely that mortgage rates will stay high for a long time in the future.
In 20 years, the dollar will still be on top, but its market share will shrink. People will use the Chinese currency, the Euro, and crypto much more.
He estimates that 20% of the world's economy happens underground in the shadows. This is a significant part in the demand for dollars.
Rogoff thinks the dollar peaked 10 years ago and it's on the way down. Dominant currencies don't fall quickly. He thinks we're heading to a more diversified world over the next 10-20 years.