Some commentators have spent decades predicting the imminent demise of the US dollar’s special status as the world’s international reserve currency. Eventually, they will be right, and that day may be drawing much closer. As usual, China could hold the key. Historically, the dollar has been the reserve currency of choice because of some clear advantages over potential alternatives. For a start, the US has a strong institutional framework, with well-established rules and many constitutional checks and balances. This makes it a relatively predictable and safe place to invest. Moreover, the sheer size of the US economy and the depth of its financial markets have created a large pool of relatively liquid assets, ideally suited as a global store of value. Indeed, many countries around the world still try to keep their own currencies stable against the US dollar, either with fixed pegs or some sort of managed exchange rate. The so-called dollar zone is therefore even bigger than the US itself. It helps too that so much of global trade still takes place in dollars. The prices of key commodities are priced in the US currency, including oil, metals and grains, and the dollar is welcomed as a means...