In my research regarding the USD as global reserve currency, I came across some very telling remarks by US Congressman Juan Vargas, representing California's 51st District, including San Diego. Vargas serves on the Committee on Financial Services and the Committee on Foreign Affairs, so he presumably knows whereof he speaks. Here he is, framing up a question for Mark Zuckerberg regarding Facebook's proposed privatized currency, Libra:
One of the things I think that you're probably sensing from us is that the dollar is very important to us as a tool, a tool of American power and also a tool of American values. So we would much prefer to put sanctions on a country than send our soldiers there. As you know, the power that we have because of that, because the banking system is significant . . . So when something threatens the dollar, we get very nervous, and I think we should be, because that's something that again, has been very useful for foreign . . . How do I say it? Projecting American values in foreign power.The quoted segment begins 45:10 in the testimony.
The Vargas quote comes indirectly via Mike Krieger, whose views on the dollar's reserve currency status mirror my own:
You can't properly discuss the entrenched global paradigm without addressing the American empire, and you can't have a conversation about empire without discussing the monetary and financial system that keeps it all in place. . . . [W]e're already transitioning into a multi-polar world, in other words, the U.S. no longer holds a position of total planetary geopolitical dominance similar to what it enjoyed in the mid-to-late 1990s. Despite proclamations to the contrary, history did not in fact end. U.S. leadership became accustomed to getting virtually whatever it wanted around the world via overt violence, covert intelligence operations or economic coercion, but this is no longer the case in 2019. . . . [I]t's much harder to maintain global empire than to frustrate it at this point, but the U.S. maintains an enormous advantage when making moves on the geopolitical chessboard. It's not the ubiquitous military bases or advanced technology, but a more esoteric and stealth weapon — the U.S. dollar. The USD continues to dominate global financial transactions, which means the world can never truly be multi-polar unless this lopsided structural reality is dealt with. . . . The significance of the USD as a weapon was put into plain view a couple of weeks ago during Congressional hearings on Facebook's Libra project. . . . [N]ations committed to functioning as sovereign states have a clear choice. Figure out a way to transact smoothly on the world stage without touching the USD, or submit to being a client state. Since the latter is seen as unacceptable for an increasing number of nations, I believe the former will be figured out, and that it'll happen by 2025 at the latest. Whenever I say stuff like this people insist there's nothing ready to replace the USD as a global reserve currency. On this front I agree, but my argument isn't that another nation-state fiat is going to totally usurp the USD on the world stage in the years ahead (nor should anyone want that). Rather, my view is competing powers will figure out a way to avoid the dollar in an increasing percentage of global transactions simply because they have no other option in a world where the dollar's been fully weaponized to achieve U.S. geopolitical goals.