Will the dollar remain the world's dominant currency?

In his new book Money Beyond Borders: Global Currencies from Croesus to Crypto (Princeton University Press, March 2026), George C. and Helen N. Pardee Chair and Distinguished Professor of Economics and Political Science Barry Eichengreen traces 2,500 years of international currencies—from the invention of coins in ancient Lydia to cryptocurrencies and central bank digital currencies—to answer that question.

His conclusion: the same factors that elevate a currency to global dominance eventually lead to its decline. And the dollar, he argues, is now on the downside of that cycle.

We spoke with Eichengreen about what history tells us—and what comes next.

You compare the dollar to the Byzantine solidus—a currency that dominated global trade for seven centuries before it collapsed. What's the clearest warning sign you see today?
One of my grad school teachers at Yale, Robert Lopez, called the solidus “the dollar of the Middle Ages” as a way of capturing its widespread use in the Near East but also across Europe and Asia for as long as 700 years.  It helped that Byzantium was situated at the crossroads of Asia and Europe, astride the leading trade route of the day.  Byzantines were financially precocious: they developed a primitive version of the bill of exchange, a financial vehicle for transferring funds across distance. Importantly, Constantine I established a fair and efficient tax system, and successive Byzantine emperors avoided living beyond their means.  Can we say the same of our aspiring emperor?

You describe the dollar's decline as "glacial," but note that glaciers can crack and fall into the sea. What could trigger a sudden flight from the dollar?
Political problems superimposed on an uncertain economic and financial backdrop.  Economically, everyone points to the strength the U.S. economy derives from its dominance of AI, but that strength should not be taken for granted (China is coming).  Whether by shunning battery, solar, and wind technology, we are in a sustainable position to power the AI revolution and meet the climate change challenge is increasingly questionable.  Financially, AI is creating heavy debts in the private credit sector, and rapidly rising federal debt creates questions about sustainability of the public finances in the minds of investors.

Now, superimpose on this troubling economic and financial background questions about the separation of powers, rule of law, control of corruption, and sheer competence of U.S. policy makers, and you have the ingredients of a panic.  Add threats to NATO and questions about whether the U.S. is still a trusted ally, and foreign officials will begin to ask whether they are prudent to rely on the United States, not just for military support but also monetary and financial collaboration.

Last year the U.S. authorized banks, tech platforms, and even retailers to issue stablecoins. You write about "a long, unhappy history of private monies." Is this a mistake?
By promoting private-label stablecoins and prohibiting the Fed from issuing a central bank digital currency (actual U.S. dollars in tokenized form), the U.S. is betting on the wrong horse.  What is clear is that distributed ledger technology (blockchain) will offer a new, more efficient set of rails for making cross-border payments.  The question is what digital unit will run on those rails.  Plain vanilla cryptos like Bitcoin are too volatile.  Stablecoins have yet to demonstrate their stability, and that “long unhappy history of private monies” provides ample caution in that connection.  There is a danger that they will lead to a return to the chaos of the Free Banking Era in early 19th-century America.  Most likely, we will see a combination of central bank digital currencies and tokenized bank deposits-dominated transactions, both of which will run on distributed ledgers.  This combination can operate within the existing regulatory framework, ensuring safety and stability.

China is moving faster than anyone on central bank digital currencies. Does that give the renminbi an opening the dollar's defenders are underestimating?
In fact, China pivoted late last year from rolling out a central bank digital currency to emphasizing the development of both a CBDC and tokenized commercial bank deposits.  This is a sensible Chinese approach to developing payment rails for cross-border transactions that don’t require the country going through the dollar, the U.S. banking system, and the Western messaging system known as SWIFT.  The problem is that China is starting out far behind the United States.  Where the U.S. and the dollar account for nearly half of all cross-border payments, China accounts for only 4 percent.  The U.S. and the dollar are involved in 90 percent of all foreign exchange transactions, China less than 5 percent.  So the country has a long way to go.  It will take a decade and more of catching up before the renminbi is in a position to rival the dollar as a global currency.

You've been at Berkeley since 1987. How has that shaped your thinking on these questions?
I’ve long been affiliated with both the economics and political science departments, so I’ve been able to address these fundamentally interdisciplinary questions by building on insights from colleagues in both departments.  I have connections with the Institute for European Studies, the Institute for European Studies and the Center for Korean Studies, which provide regional expertise.  And Berkeley has had an incredibly deep bench of international economists over the years: at risk of forgetting someone, I can count as fellow international monetary specialists Jeff Frankel, Pierre Olivier Gourinchas, Dick Meese, Maury Obstfeld, Ken Roggoff, Andy Rose, and Janet Yellen, all of whom are leaders in the field.