to the dollar, as other prominent reserve currencies — such as the euro, japanese yen, and british pound — are all issued by close u. s. allies, who also participated in sanctions on russia. more generally, some worry that the dollar ’ s role could be threatened by a move toward so - called geoeconomic fragmentation, in which trade and financial flows realign and become restricted within blocs of allied countries. the formation of a bloc that excludes the u. s. — or even explicitly seeks to counter the united states ’ role in the global economy — could make some countries less likely to denominate international transactions in dollars. this scenario sounds alarming, but thus far, trends that appear consistent with fragmentation largely can be explained by specific policy actions. one example is the dramatic reallocation of u. s. – china trade in recent years, as firms in each country decrease reliance on imports sourced from the other. while this shift has coincided with - 9a period of heightened geopolitical tensions, the evidence suggests a simpler explanation : firms responding to changes in relative prices, in this case caused by the imposition of reciprocal tariffs by the two countries since 2018. for example, while u. s. imports of tariff - affected goods from china have plunged, imports of goods not subject to tariffs have continued to rise. 14 despite the reallocation of trade flows across countries, at the end of the day, those trade flows continue to be invoiced mainly in dollars. a final consideration regarding the international use of the dollar relates to financial stability concerns. in times of global financial stress, investors and governments seek a safe haven to protect the value of their assets and stabilize their own financial markets. when this happens, there is almost always a “ flight to the dollar ” and heightened demand for u. s. dollar assets. we saw this in 2008 and again in 2020. this is the ultimate vindication that the u. s. dollar is the world ’ s reserve currency and is likely to remain so — in times of global stress, the world runs to the dollar, not away from it. to conclude, for the reasons i have laid out here, i do not expect to see the u. s. dollar lose its status as the world ’ s reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance. recent developments that some have warned could threaten that status have, if anything, strengthened it, at

, stephanie curcuru, and justin pierce for their support in preparing this text. see eichengreen ( 2011 ). - 2role has clear benefits for the united states, lowering transaction and borrowing costs for u. s. households, businesses, and government and widening the pool of creditors and investors. the widespread use of the dollar can help insulate the u. s. economy from shocks from abroad. the rest of the world also benefits from the dollar ’ s international role. the dollar serves as a safe, stable, and dependable form of money around the world. it serves as a reliable common denominator for global trade and a dependable settlement instrument for cross - border payments. in doing so, it reduces costs of engaging in international transactions for households and businesses including those outside of the united states. recent commentary warning of a possible decline in the status of the u. s. dollar raises concerns about the effects of sanctions against russia, u. s. political dysfunction, the rise of digital assets, and china ’ s efforts to bolster usage of the renminbi. other commentary has warned of “ geoeconomic fragmentation ” and whether trade and financial flows could realign in ways that adversely affect the dollar ’ s outsized role. against this backdrop, it ’ s useful to review whether there has been any change in how the dollar stacks up against the standard measures by which we assess a currency ’ s acceptance as an international currency. acceptance as an “ international currency ” is typically assessed along three dimensions : its use as a store of value, as a medium of exchange, and as a unit of account. alarmist headlines notwithstanding, the dollar continues to dominate in all three of these measures, and generally by a large margin compared with any other currency. 3 see maggiori, neiman, and schreger ( 2019 ). - 3the “ store of value ” dimension relates to the ability to save in a given currency and retrieve those savings in the future without a significant expected loss of purchasing power. a key measure of the confidence in a currency as a store of value is its use in official foreign exchange reserves. at almost 60 percent of global reserves in 2022, the u. s. dollar is by far the dominant reserve currency. 4 the next leading competitor to the dollar is the euro, with a share of roughly 20 percent. although some have pointed to a decreasing share of reserves held in dollars, the dollar share — though down somewhat from