The Hudson Institute has produced a poisonous report insisting that the BRICS has aimed at replacing the U.S. dollar as a world reserve/exchange currency. The fact is, that the two single factors that have reduced the role of the U.S. dollar as a reserve currency have been 1) the introduction of the euro and 2) the weaponization of the U.S. dollar.
In 1998, before the introduction of the euro in 1999/2000, the U.S. dollar share of reserve currencies was about 71%, with the deutschmark and the French franc together at 20%. The euro share replaced the combined deutschmark and French franc share, actually slightly less at 18%. However the euro share eventually rose to 27% and the U.S. dollar dropped to 62% in 2010. In other words, the euro had gnawed almost 10% from the U.S. dollar! In the same period, the putative challenger to the U.S. dollar role, the Chinese yuan had remained stable at plus/minus 1%.
Today, the U.S. dollar share is at 57.8%, while the yuan is at 2.1%. However, the euro is at 20.1%. Who has eroded the U.S. dollar role?
