Title: The U.S. Dollar's Unofficial Status as World Currency
Headings: The U.S. Dollar's Unofficial Status as World Currency
The U.S. Dollar's Unofficial Status as World Currency
Overview
Why is the U.S. dollar the currency of choice?
How do all those dollars get overseas?
The Bottom Line

Content: The U.S. dollar has only been deliberately devalued once—as part of the Roosevelt administration's gold policy—and its notes have never been invalidated. 1 ﻿ For countries all too familiar with bank failures, devaluation and inflation, the stability of the U.S. dollar brings with it a certain amount of peace of mind. Business is easier to conduct when a stable currency is used. Unofficial dollarization can be so prevalent in some countries that more U.S. currency is in circulation than local currency. Once this happens, it can be difficult to reverse. Ironically, the very stability that dollarization brings can be a curse to local governments, as they lose the power to control inflation and fiscal policy. However, to many, what is a curse to the government is a blessing to others. In the paper "Currency Substitution – Unofficial Dollarization and Estimates of Foreign Currency Held Abroad," Feige, Faulend, Sonje and Sosic estimate that 40% to 60% of existing U.S. dollars circulate outside of the United States. This estimate is supported by the actions of U.S. federal agencies, which produced posters and pamphlets in 24 languages to highlight the new look and anti-counterfeiting features of updated bills produced between 2003 and 2006. Money is only valuable if it is acceptable.