Although the dollar remains the global reserve currency, there is widespread dissatisfaction with the role. On the domestic front, the dollar’s role has been positive for financial services and retailers, but it has been a persistent negative factor for import-competing industries and their workers. Foreign nations are increasingly uncomfortable with the U.S. weaponization of the dollar through financial sanctions. The decision by the EU to create a mutualized bond, a debt instrument backed by the full faith and credit of all the member states of the EU, creates a competing instrument for the U.S. Treasury. If debt mutualization continues to expand, the euro will become an attractive reserve currency to foreign reserve managers.

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