The future of dollar dominance under political manipulation: an econometric study 2015-2030

Abstract

This study investigates the implications of the United States’ deployment of the U.S. dollar as a political instrument, particularly through the imposition of sanctions and the freezing of assets—a practice referred to as the “exorbitant privilege”—which has enabled the dollar to sustain its dominant status in the global financial system, accounting for approximately 58% of international reserves. The analysis highlights that the overuse of this instrument may incentivize other major global powers to pursue alternatives to the dollar. Quantitative projections, derived from the ARMA model, indicate that the dollar’s share of global reserves may decline to approximately 35% by 2030, closely approaching the euro’s share (34%), alongside a marked increase in the share of other currencies, signaling a gradual transition toward a multipolar international monetary system.