The US dollar is the closest thing there is to a global currency. It’s the payment method of choice for more international transactions than any other currency. It’s the primary reserve currency for countries around the world, whether friendly and hostile. Dozens of countries around the world peg the value of their local tender to it.
Another advantage: dollar-denominated assets are so abundant that they’re among the most “liquid” assets in the world — meaning they can be easily bought and sold. That same country could simply allow its currency to slide, but that would have other consequences, including the risk of fueling inflation. Also, any dollar-denominated debt held by that government and its people would become more expensive to pay off with local currency. That’s a big issue for a lot of countries, particularly those with developing economies. If the debts become too unmanageable, a financial crisis might even ensue.
Source: Financial Digest (financialdigest.net)
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