[adrr]

What happens when USD stops becoming the the reserve currency for the world? And who takes its place?

[mywittyname]

To the rest of the world - Nothing. Trade works just fine without a reserve currency.

For the USA - massive inflation. All of those dollars are coming back home, which will weaken the dollar.

Plus, there's the second-order effects from a president taking control of the fed by trumping up charges on its members. So high inflation + low/zero/negative interest rates.

[traceroute66]

The USD has already been in decline as a reserve currency. The only thing that is happening is the decline is accelerating.

It is not necessarily a question of "takes its place", but more about being more serious about diversification. Or to paraphrase the old IBM saying "nobody got fired for buying USD" is no longer the case.

In terms of options you have JPY, EUR and CNY as the big-three and maybe tag AUD on top.

[itake]

Why AUD and not SGD?

I guess AUD has higher GDP (but much lower GDP per capita and worse forex rate to the us dollar)

[shimman]

Look up something called "dedollarization," it's been talked about in academic circles for quite some time and now more mainstream institutions are discussing it more too.

[KPGv2]

Yes, in my undergrad government policy classes twenty years ago, we were talking about a "basket of currencies" that would replace the USD as the global reserve.

[Archelaos]

The share of the USD as a reserve currency has already been slowly declining over the last decade, although it is all but dramatic. The reduction is not in favour of another particular currency. Instead, the proportion of minor currencies is increasing. Here is a diagram for the years 2016 to 2023: https://de.statista.com/statistik/daten/studie/232562/umfrag...

[corimaith]

>And who takes its place?

Anybody who can (EU, Yuan) does not want to. Primairly because as export based economies, they want a weak currency in relation to a strong reserve (dollar) so they can make their goods more competitive, and also because surplus naturally appreciates a currency without central bank intervention via buying US treasuries to offset the appreciation. And for China, they're not going to accept the liberalized capital controls neede for it either.

So the answer is if the US dollars fail it would be global economic collapse and then chaos, but contrary to the rhetoric the rest of the world's economic systems are too uniquely vested in the USD to see it fail. As for gold, well we come to the same problem as noted above but worse, and in that situation the US actually holds the highest gold reserves so they still benefit the most out of it.

[NoboruWataya]

I doubt it would be replaced by a single global reserve currency. More likely there would be a handful of currencies that perform a similar role (USD, EUR, CNY, maybe some others) and which you primarily use depends on whose sphere of influence you are in.

[jlarocco]

I wonder if there needs to be a single reserve currency any more.

In the past it made things easier for everybody to use the same currency, but is that still the case with modern electronic transactions?

Maybe it splinters into Euro, BRICS, and USD?

[kzrdude]

It's easier if contracts run on the same currency I think, your suppliers price in USD, you sell your products in USD, it's easier for a whole supply chain that way. I can imagine that fracturing or switching to Euro for things like manufacturing and semiconductors.

[jimnotgym]

My guess would be EUR takes its place, gold will also be used more. I guess what happens is USD gets much weaker and US buying power goes down. Maybe destroying the USD will eventually cause the boost to domestic manufacturing that Trump wanted, since foreign goods will be out of reach. Cut down the forest to kill a squirrel. I'm no expert though

[throwway120385]

There will never be a boost to domestic manufacturing without some kind of investment. The booms of the 1950's and 1960's were a result of massive government spending in the 1930's and 1940's building a bunch of capacity and researching novel manufacturing techniques and building new tools. If we don't have the morale for that we will simply stop having as many things.

[shermantanktop]

Historically, gold’s day in the sun is always juuust around the corner, right after the disastrous collapse that never quite arrives.

Now that we really do have a destructive realignment underway, maybe gold will actually be useful again. I doubt it, but I’m no currency expert.

[acdha]

Domestic manufacturing isn’t coming back without a thoughtful investment program. A lot of older people still think of China like in the 1980s where it was mostly low-wage, low-quality products but that’s nothing like true now and they have entire clusters of world-class product pipelines with long supply chains which would take a long time to bring back in stages.

The other problem seems even bigger: we don’t have many high-skill workers available, but our wages are high enough that anyone bringing manufacturing back is going to try to automate it as much as possible. That seems like a real bind for the Republicans’ isolationist strategy: exports will be down due to a trade war and a difficult price/value ratio in the areas other countries currently dominate, and if we’re heading into a more automated economy we’re going to have a growing number of people who won’t be able to afford to buy much. This seems like a vicious self-inflicted cycle if it gets rolling.

[basilgohar]

The US starts more wars until its eventual complete collapse. See The Rise and Fall of the Roman Empire. We're operating out of a playbook for imperial destruction word for word.

[drstewart]

"History buffs" that literally only know the Roman Empire and Hitler should probably try expand their purview.

[tinfoilhatter]

The petrodollar (a product of Kissinger) has been in collapse since Saudi Arabia began divesting from it.

We've been printing pretend money for quite some time, and supressing the value of precious metals (which is why you're now seeing silver bullion sell for $100+ an ounce). Copper is also selling out now.

These precious metals are extremely valuable because they're used to manufacture all of the technology consumers and nation states rely on daily. We're going to see a regression towards mercantilism and commodity hoarding. Most likely fiat will be abandoned in favor of crypto as we enter a new era of hyperinflation.

Buckle up - 2026 is going to be a wild ride.

[hrimfaxi]

How has the US been suppressing global metal prices?

[tinfoilhatter]

Gotta love HN - getting downvoted with no explanation, but most likely because the truth is uncomfortable and people would rather press the downvote button than face facts.

[Ekaros]

Probably some type of balanced trade. Holding each trade partners currency and balancing it at times. Or even between multiple holders and currency pairs.

If there is need you can now build very complicated systems as everything is digital anyway.

Maybe stable coins would be finally useful. Each currency has own stable coin and then they are automatically traded in massive market... /s

[fisherjeff]

As much as it pains me to say it, this is a plausible answer in 2026

[axus]

Bitcoins, probably

[WarmWash]

The dollar sucks but everything else is worse.

[LunaSea]

The USD dollar sank -10% this last year versus the euro.

[vdupras]

Hey, it's nice that you came in signed up to HN to cheer for the USD. I think it's going to be needed to change the overall sentiment.

[petcat]

That would never happen until the US Navy ceases to be effective globally.

[epistasis]

What is the theory of how the US Navy keeps the dollar the reserve currency, when the US has made itself a pariah state? What mechanism? Would the US Navy be doing piracy and demand protection money in dollars? Piracy payoffs would be a far far lower demand for dollars than there currently is and, and also greatly reduce all other trade with the US, further reducing demand for US dollars.

Really curious what your reasoning is here.

[jansper39]

If the US pisses enough countries off with this Greenland stuff that they shut down US bases around the world, that substantially curtails the US Navy's ability to be effective globally.

[actionfromafar]

The argument made like that is an original argument bent backwards. The argument was that the US Navy guaranteed open shipping lanes and kept Pax Americana. Now we get closed shipping lanes and Bellum Americanum.

[mythical_39]

I saw an interesting article about plumbing problems on one of our aircraft carriers.

https://www.npr.org/2026/01/17/nx-s1-5680167/major-plumbing-...

[sekai]

> That would never happen until the US Navy ceases to be effective globally.

US Navy would have have no parking spots left in Europe if they try to annex Greenland.

[sonotathrowaway]

You mean like how the Houthi’s unilaterally decided to shut down Red Sea shipping and the US Navy is still powerless to restore it?

[neilwilson]

We finally realise there is no such thing as a “reserve currency” in the floating exchange rate era and that the concept is a long dead hangover from fixed exchange rates.

And that’s definitely going to upset the gold bugs.

(In reality lots of things are held in reserve)

USD is a routing currency that is used because it is cheaper than the mesh alternative. When it stops being cheaper whoever is then cheapest will get the routing transactions.