The US dollar's unprecedented role stems from the dominance of the US economy in global trade and capital imbalances.
Trade settlements used to revolve around gold and silver, with credibility based on their acceptance or convertibility.
Sterling's significance was limited to European trade settlements and faced credibility issues when claims exceeded gold reserves.
The dollar-based system differs in trade imbalances, global demand impact, and the relationship between trade and the capital account.
Anglophone economies, including the US, attract surplus countries' savings due to their financial systems, causing distortions.
Surplus countries suppress domestic demand to maintain competitiveness, as warned by Keynes in 1944.
Transitioning Beyond Dollar Dominance:
A transformation in global trade structure is needed to reduce imbalances and end mercantilist practices.
Moving beyond dollar dominance brings benefits and potential disruptions for surplus countries like Brazil, Germany, Saudi Arabia, and China.