Artem Voloskovets
In global financial markets, the US dollar occupies a primary position because it holds a large share in many areas.
According to data that the Bank for International Settlements, the Federal Reserve and the International Monetary Fund collected, the dollar is used in 89 % of all foreign exchange trades. For those markets, the currency is the main source of liquidity.
To provide financing, many entities use the US dollar - it is the currency for 61 % of debt that governments and corporations issue outside of their home markets.
In global reserves, the dollar accounts for a 57 % share - and although this share is smaller than it was in the past because countries buy other currencies, the dollar is still the main component of the international monetary system.
By looking at economic activity, one can see the influence of the currency. On global export invoices, the US dollar appears 54 % of the time, which means that people price and settle most international trade in this currency. The dollar is present in 51 % of transactions between banks.
As people discuss de dollarization and other currencies, the data shows that the position of the dollar is stable. Because it is easy to trade and uses established systems, it is the most common tool for trade, investment and reserves.
If diversification trends change the global area over time, the current data shows that the US dollar is likely to be the main part of international finance for a long period.
Artem Voloskovets
