The Dollar has been ruling the world's global reserve for decades. The supremacy of the dollar also gives the US the massive political power to do aggressive sanctions against other countries. Since the Russia-Ukraine war started, many questions about the dollar's hegemony have been raised.
The reason behind the downfall of the dollar.
In 2000, the dollar's share in global central banks, which was 71 percent dropped to 59 percent. In the fourth quarter of 2020 shares of the dollar were at a 25-year low mark on Global Foreign Exchange Reserves the biggest reason behind this, is the rise of other currencies such as the Euro and Renminbi. Even Goldman Sachs has warned that the dollar is losing its hegemony rapidly. The main reason behind the decline in the hegemony of the dollar is the "WEAPONIZATION OF DOLLAR" nowadays, sanctions imposed on Russia by the US and western countries have been criticized globally.
Rise of the Chinese Yuan.
China has become the largest trading partner of 125 countries in the world, also 70 central banks in the world hold the reserves of yuan. China is also working towards the digital version of the yuan to build institutional mechanisms. Xi Jinping launched a project to digitize the yuan and to make blockchain technology a national priority in October 2019.
Yuan VS Dollar.
China is leading the whole world in the revolution of digital currency. It is to be noted that the yuan is giving tough competition to the dollar. But the dollar is a widely used currency for international trade, not only because of its vast network rather but because of many other reasons behind this which are difficult to replace for countries like China. The Dollar will maintain its dominance in the short term but in the long run, it will face many challenges from the yuan.