Other candidates for the job

In reality, the pickings are thin for viable contenders to seize the revered global reserve-currency status. Some analysts suggest the euro has gained some traction in this respect since its inception in 1999, but others say it still isn’t up to snuff.

“You’re talking about a strategic decision about the way you manage your country’s assets,” notes BMO Capital Markets’ Busch. “The question is: Do you feel comfortable putting your country’s assets into a reserve currency that has only been around since 1999? That’s why more people haven’t done it.”

Also, some analysts argue the euro capital markets simply are not deep nor liquid enough to take on this role in the foreseeable future.

“There is no alternative to the dollar,” says KenGoldstein, economist at the Conference Board in New York. “There is no euro bond or yen bond market that could take on that role.”

BNP Paribas’ Fabbri, however, calls the euro a “serious alternative,” citing the growth and stability of the euro and euro-denominated instruments.

“It is not a rejection of the dollar or our politics, it is a function of the evolution of the euro and its credibility,” he explains.

Bob Lynch, head of G-10 strategy at HSBC, agrees.

“The euro is making inroads,” he says. “It is being used as a transaction currency. The liquidity of the euro has steadily increased, which has been an element that has enhanced its appeal as a reserve currency.”

The British pound was also offered up as a potential alternative reserve currency. Analysts note that Commonwealth countries, such as Canada, New Zealand, and Australia, likely have a portion of their reserves in the British pound.

And casting an eye to the world’s emerging economic powerhouse, Fabbri speculates that in 50 years, perhaps the Chinese currency could step into the role.