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: While many people associate dollarization with the U.S. dollar, the association is not exclusive. The euro, South African rand, Russian ruble, New Zealand dollar and Australian dollar are also accepted outside their countries, although in a localized nature. For example, the Russian ruble is accepted in a number of countries from the old Soviet Union. Why is the U.S. dollar the currency of choice? Stability is one of the major factors that explains why a number of countries have adopted the U.S. dollar as official currency. 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.