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: Read a more in-depth explanation of dollarization .) Overview
During the eighteenth and nineteenth centuries, the British pound reigned as the world's reserve currency but in the twentieth century, the U.S. dollar laid claim to this title. It has been the dominant reserve currency since the end of World War II. Dollarization is a generic term that can fall into three categories: Official dollarization: The dollar is the only legal tender; there is no local currency. Examples of this can be seen in Panama, El Salvador and Ecuador. For example, since independence in 1903, Panama has only used the U.S. dollar. Surprisingly, the U.S. government does not have to provide approval for another country to use its currency as legal tender.