Don’t call time on dollar dominance just yet, say analysts as ‘petroyuan’ call sparks debate
... “Oil is not priced in US dollars simply because the United States has long acted as the world’s policeman,” wrote Sonal Desai, Franklin Templeton’s fixed income CIO.
“Oil exporters have a strong self-interest in getting paid in USD, because of what dollars represent: access to the deepest, most liquid capital markets in the world, backed by an institutional and legal framework that protects property rights and enforces contracts, supported by a strong, dynamic, and innovative economy.” ...
Franklin Templeton’s Desai added in the note that building the right infrastructure for a credible replacement, consisting of “deep markets, rule of law, full convertibility, a track record of macro stability”, takes decades, not years. ...
Desai added that the dollar’s recent weakness is simply a function of its characteristics.
“Some dollar softness is perfectly consistent with global reserve currency status,” Desai wrote.
“Unlike the renminbi, the dollar is a freely floating currency. It floats – up and down.”
