The dollar has been a stalwart of international trade over the majority of the last century. Around the time of the formation of the Eurozone, it reached its recent peak at 71.0% of official foreign exchange reserves. Since then, its composition of global reserves has more recently dropped to a more modest 62.9% in 2014.
However, the dollar is slowly losing its status as the world’s undisputed reserve currency. This is not an unusual event as far as history goes. In fact, about every century or so since the Renaissance, the global reserve currency has shifted. Portugal, Spain, The Netherlands, France, and Britain have had dominant currencies at different times.
Today’s infographic shows that the wind is shifting in international trade. China is at the epicenter and is making progress in cutting deals outside of the U.S. dollar framework. Deals shown in the graphic are currency flows between countries that have abandoned the dollar in bilateral trade, as well as countries that are considering such measures.
The most recent culmination of these trends is the creation of the Asian Infrastructure Investment Bank (AIIB), a China-led rival to the World Bank and IMF that includes 57 founding countries and $100 billion of capital. The United States is not a member and has actively lobbied its allies to avoid joining due to perceived governance issues.