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Will the U.S. Dollar Lose Its Reserve Currency Status?
Will the U.S. Dollar Lose Its Reserve Currency Status? A Brutal Reality Check
By AVA Investment Analytics | July 2023 Edition
In recent years, a growing chorus of financial pundits, gold bugs, and YouTube influencers have warned of the imminent demise of the U.S. dollar as the world’s reserve currency. They point to rising inflation, U.S. debt ceilings, the rise of China, or the increasing use of sanctions as supposed nails in the dollar’s coffin.
Let’s be blunt: it’s mostly hype. And no one dismantles the hysteria better than Mike Stathis of AVA Investment Analytics, who delivered a comprehensive takedown of this narrative in his July 2023 presentation.
The detailed live presentation (recorded) can be found below:
Does the Dollar Risk Losing its World Reserve Currency Status?
The Framework: 11 Criteria That Actually Determine Reserve Currency Status
While most analysts stick to surface-level issues—like GDP size or trade flows—Stathis digs deeper. His framework outlines nine classical factors drawn from international monetary theory, and two original criteria almost no one else talks about.
Together, these 11 benchmarks provide a no-nonsense method for determining whether any currency has what it takes to be—or replace— global reserve standard.
The Currencies Under Scrutiny
We compare the three most frequently mentioned contenders:
- USD (U.S. Dollar) – The incumbent
- EUR (Euro) – The most often cited alternative
- RMB (Chinese Yuan) – The hope of the de-dollarization crowd
Each currency is scored from 1 to 3:
3 – Fully satisfies the criterion
2 – Partially satisfies
1 – Fails
|
# |
Criteria |
USD |
EUR |
RMB |
|
1 |
Economic Size & Growth |
3 |
3 |
2 |
|
2 |
Financial Market Depth & Openness |
3 |
2 |
1 |
|
3 |
Share of Global Trade / FX Usage |
3 |
2 |
1 |
|
4 |
3 |
2 |
1 |
|
|
5 |
3 |
3 |
1 |
|
|
6 |
3 |
2 |
1 |
|
|
7 |
3 |
1 |
1 |
|
|
8 |
3 |
2 |
1 |
|
|
9 |
3 |
2 |
1 |
|
|
10 |
3 |
2 |
1 |
|
|
11 |
3 |
2 |
1 |
|
Currency |
Fully Meets |
Partial |
Fails |
|
USD |
11 |
0 |
0 |
|
EUR |
3 |
6 |
2 |
|
RMB |
0 |
2 |
9 |
Why the Dollar Remains Untouchable (For Now)
Stathis makes the case that the U.S. dollar's dominance isn’t just economic—it’s structural, institutional, legal, and geopolitical. It’s backed by:
- The world’s deepest and most liquid sovereign debt market (U.S. Treasuries)
- ???????????? (Stathis original)
- ???????????? (Stathis original)
Why the Euro Still Falls Short
The euro might look promising—Europe is a large economy, the ECB is a serious central bank, and FX reserves show 20% of global holdings are in euros.
But it has a fatal flaw: ????????????
Why the Yuan Doesn’t Even Belong in the Conversation
Despite years of hype, China's RMB is nowhere near reserve currency material. Its capital markets are closed. Its data is distrusted. It accounts for less than 3% of global FX reserves. And one-third of that is held by Russia.
China’s authoritarian controls, demographic decline, real estate implosion, and rampant corruption make it clear: there’s zero chance the RMB overtakes the dollar in our lifetime.
“There’s no way China will ever become the global reserve currency. Ever. I’ll stake my legacy on that.”
— Mike Stathis, July 2023
Bottom Line
The U.S. dollar is nowhere close to losing its reserve currency crown. The threats are exaggerated, the alternatives are flawed, and the mechanics of the global financial system still run on trust, transparency, liquidity, and power—all of which still favor the U.S.
If you’re an investor, asset manager, or just a critical thinker, ignore the panic merchants. Study the structure. Understand the system.
The dollar isn’t going anywhere. And neither is reality.
The detailed live presentation (recorded) can be found below:
Does the Dollar Risk Losing its World Reserve Currency Status?