As the American economy stabilizes, Gillian Tett, columnist of the Financial Times, defends the dollar's dominant position in her article "Why the dollar stays steady as America declines". Jeffrey Frankel, professor of Harvard Kennedy School, has a different point of view: in his article "The dollar and its rivals", he writes "it is not an eternal law of nature that the U.S. currency shall always be number one".

Tett's defense was triggered by a statement made by Kingsley Moghalu, the deputy governor of Nigeria's central bank. He has pledged to convert almost one tenth of Nigeria's $43bn reserves from dollars to the Chinese renminbi.

News released by Society for Worldwide Interbank Financial Telecommunication on Dec. 3 2013 should be noted: by last October the renminbi had exceeded the Euro in global financial transactions, making up 8.66 percent of the total.

According to some analyses, an effective currency in international trade must have two features: first, issued by a big trading country itself, and second, value-preserving like goods.

Nowadays the dollar's hedging ability is weakening. The large-scale issue of dollars by the Federal Reserve under its quantative easing program has weakened the purchasing power of the dollar and encouraged other major trading countries to seek alternative currencies.

The international crude oil market used to settle accounts in dollars, but lately Saudi Arabia has expressed its intention to break away from the dollar. Voice of Russia commented that if the dollar ceases to be the standard currency for international crude oil deals, it will probably lose its position as the international base currency.

Other currencies are challenging the dollar too. According to a prediction made by City Bank, by the end of 2014 the exchange rate of the British pound against the dollar will rise to 1.70. According to Mark Schofield, managing director of City Bank's Global Strategy & Macro Group, 1.70 will be the highest exchange rate of pound to the dollar since the financial crisis, and once this barrier is crossed, a new trend may emerge.

However, there are also reasons to believe that the position of the dollar is unshakable.

Presently, only 0.01 percent of central bank foreign exchange reserves are held in renminbi, compared with 60 percent in dollars and 25 percent in Euros. However, this neglects the fact that in 2005 the dollar took up 67 percent, and in 2000, 71 percent.

The depreciation of other competitive currencies, such as the Euro and the Japanese Yen, also contributes to the stabilizing of the dollar.

The confidence of the defenders of the dollar also comes from the fact that the American economy is recovering, and the Federal Reserve is reducing the scale of asset acquisition—these dynamics are both strong supports to the exchange rate of the dollar.

But although the dollar has been stable recently, according to some experts a decline is inevitable.

Jeffrey Frankel points out that the dollar's role as the international currency has been weakening since 1976.

It is not an eternal law of nature that the dollar shall always be number one. The British pound sterling held the top spot in the nineteenth century, only to be surpassed by the dollar in the first half of the twentieth century.

Justin Lin Yifu, former Chief Economist of the World Bank, recently expressed the view that the dominant position of the dollar was at the root of the global economic and financial crisis. To prevent the recurrence of such a crisis we need a supranational currency to replace the dollar as the dominant international reserve currency.

The popularity of the bitcoin was a landmark event in last year's international financial market, which also reflected popular discontent with the dollar. Some people even believe that there is a 'war' being waged under the cover of currency trading, and the target is the Federal Reserve.

The article is edited and translated from《美元永远第一绝非宇宙真理》, source: People's Daily Overseas Edition, author: Yang Ziyan.