The US dollar's demise has been exaggerated, report finds

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Hilltower Resource Advisors CEO and chief market strategist Tracy Shuchart discusses whether gold or crypto could replace the U.S. dollar as the global reserve currency on Making Money.

A new report by JPMorgan casts doubt on claims that the U.S. dollar's status as the dominant currency in the world financial system is coming to an end amid the rise of competing alternatives.

China's rapid growth in recent decades and its emergence as the world's second-largest economy and sanctions imposed on Russia have contributed to greater diversification away from the dollar in global markets, JPMorgan said. 

However, it added that the dollar's dominance as the world's primary reserve currency is «well-entrenched and structural in nature.»

«The dollar's role in global finance and its economic and financial stability implications are supported by deep and liquid capital markets, rule of law and predictable legal systems, commitment to a free-floating regime, and smooth functioning of the financial system for USD liquidity and institutional transparency,» JPMorgan analysts wrote.

US DOLLAR TO REMAIN WORLD'S RESERVE CURRENCY, FED'S WALLER SAYS

The status of the U.S. dollar as one of the world's leading currencies isn't likely to change soon, the JPMorgan report found. (Photo by Mark Wilson/Getty Images / Getty Images)

«The genuine confidence of the private sector in the dollar as a store of value seems uncontested, and the dollar remains the most widely used currency across a variety of metrics,» the firm wrote.

JPMorgan's report said that the dollar's share of foreign exchange reserves rose from 59% in 1996 to a peak of 73% in 2001 and has declined since to 58.4% as of the end of 2023, according to IMF COFER data. However, it