Since the Bretton Woods agreement in 1944, which set the direction for the world's financial system for the next 27 years, the US dollar has enjoyed the status of the global reserve currency - the currency in which almost all world trade is conducted.
This meant that central banks all over the world needed dollars. And the way they got them was for the US to increase its imports, bringing in goods from all four corners, in exchange for its currency, still warm from the printing process that produced it.
By 1971, there were more dollars in the world than there was gold to back them, sparking a global financial crisis, and causing the Gold Standard to be abandoned. The number of dollars in the world continued to increase, as did the US deficit, and the dollar became ubiquitous.
But not everyone was happy. The dollar's position gave the US an unprecedented power and left the economies of the world, especially the smaller ones, subject to its whims, both planned and not.
As a result, a war - of sorts - has erupted between the world's major and emerging economies. In place of an arms race, the world's biggest economies have been engaged in a race to the bottom, as it were: a competition to devalue their own currency, thus boosting their export power at a time when exports are being used to drive economic recovery.
China is applying pressure on the dollar by linking its yuan to it at a rate which is frustrating Washington, but about which there is little it can do.
As in any war, there is 'collateral damage'. In this currency war, emerging economies, such as that of Brazil, are seeing their own currencies increase in value, by comparison, and their growth jeopardised.
G20 currency cease-fire
This state of affairs is not one that can continue without undermining the economic development of some of the most populous regions of the world. A meeting of the G20 brought about a 'cease-fire' but the underlying factors remain.
These were brought into stark relief by the banking crisis in 2008, which started in the US and spread, from there, to a greater or lesser extent, all over the world.
An alternative to the dollar's hegemonic position has therefore been seriously discussed and, indeed, presents itself in the form of a little-used quasi currency, created in 1969.
Special Drawing Rights (SDRs) are not in themselves a currency, but are a 'reserve asset' defined by the IMF as a potential claim on the currencies of IMF member states, for which they may be exchanged: "The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members."
SDRs are allocated by the...