Date of Award


Document Type

Open Access

Degree Name

Bachelor of Arts



Second Department


First Advisor

Eshragh Motahar

Second Advisor

Jue Wang


Reserve Currencies, China, Renminbi, International, Monetary System, Dollar


Throughout most of post World War II period, the United States dollar has been globally accepted as the dominant reserve currency. This dominance comes with “exorbitant privilege” or special benefits such as not having a balance of payments problem. Therefore, with the shifting of global geopolitical balance of power in the age of Trump, along with the recognition by the IMF of the Chinese renminbi as an international reserve currency in 2015, it is important to understand the modern influence of reserve currencies. We provide an updated study of the status of the dollar, the euro, and in particular, the renminbi as it is an upcoming reserve currency. To do so, we use currency exchange rate data and apply modified workhorse regression models analyzing the co-movement of 149 countries’ currencies with each of the five major reserve currencies. We are then able to assign each country’s gross domestic product at purchasing power parity to a reserve currency bloc in order to obtain a global sphere of influence for each reserve currency. We find that the United States retains its dominance but faces challenges from the renminbi and the euro in recent years as the international monetary system becomes tri-polar. We analyze particular current events in specific countries and regions to help explain why we see this shifting dynamic.