A Financial Times article by Wolfgang Munchau has referenced a study claiming that the persistent deficits in current account and a long-term fall in the US dollar coupled with the rise of the euro (a potential genuine alternative to the dollar) would suppress the global role and standing of the US dollar. The said study was conducted by professors at the Harvard University and the University of Wisconsin.

However, Munchau has taken it a bit further by claiming that the euro could actually become the dominant reserve currency in the world sooner, due to the reckless policies of the Federal Reserve, the relative strengthening of the financial system of Europe, and the reluctance of third-world countries to maintain a dollar peg.

The US dollar has been the dominant reserve currency in recent decades, but it has to be noted that this has not always been the case. Up until World War II, the British pound held the title.

Many still claim that it remains highly unlikely that the euro will actually displace the US dollar as the dominant reserve currency within the next 10 years. Nevertheless, they believe that the amount of reserves that are held in euros will be close to matching those held in US dollars. If you enjoy reading this article, you'll surely learn more by reading how to calculate exchange rates.