From the dominant reserve currency for central banks to the main conduit for global trade and borrowing, U.S. dollars are the lifeblood for banks and markets around the world.
A Fed research paper estimated in 2017 that as much as 70% of all dollars are held outside the United States and 60% of all $100 bills circulated overseas.
Another Fed paper this year said roughly half the 1.6 trillion of dollar banknotes in circulation were outside the United States.
Markets got a reminder of the greenback’s hegemony in September when a squeeze in overnight dollar funding rates in New York sent shivers across the world.
Governments and central banks have tried to reduce their dollar-dependency, with Bank of England governor Mark Carney describing its role in the world economy as “destabilising”. But de-dollarisation is likely to take many years.
Here are some ways the dollar is used: