Global dollar dominance threatens economic stability and international relations.
The rest of the world heavily uses the U.S. dollar, which affects global debt and economic activity. Most countries have stable currencies tied to the dollar, creating a large dollar zone. Despite the U.S. having more dollar assets than liabilities, corporate sector dollar debts can lead to global credit tightening. Claims that the dollar's global role benefits the U.S. economy have support, but evidence of unsustainable deficits due to demand for dollars is weak. The Federal Reserve has shown readiness to support the dollar's global dominance in times of crisis. However, political factors could limit this support for countries not on good terms with the U.S.