IndexWhy US dollar is used as a global currencyWhy not use Canadian dollar or Australian dollar or any other currency better than US dollar? When is the US dollar used as an exchange? How do international people know about the US dollar? History of the US Dollar The US dollar is the official currency of America and its currency code is USD, while its currency symbol is $ (Dunning). According to global currency rankings, USD to EUR exchange rate conversion has been found to be the most popular exchange rate to date in the United States (Goldberg and Tille). Therefore, the US dollar is divided into units smaller than 100 cents. However, the US dollar can also be made up of Federal Reserve notes in 1000 mill denominations, which are usually dominant in the American currency (Eichengreen and Mehl). Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Why the US Dollar Used as a Global Currency The US dollar is not only used as a global currency but also as an exchange tool for currencies (Goldberg and Tille). This is because the US dollar is the most popular and strongest currency, accounting for up to 64% of global foreign exchange reserves (S. Sumner). Furthermore, the strength and stability of the American economy increases the exchange rates of their currency, making the US dollar the reserve currency, and therefore more appropriate as an exchange tool for currencies and as a global currency (Eichengreen and Mehl). The US dollar has been used as a global currency, as well as used to exchange currencies for various historical reasons. For example, the continuing influence of the Bretton Woods Agreement made towards the end of World War II contributed largely to the use of the US dollar in the global forex market (WG Sumner). After the devastating effects of global war, the United States economy remained relatively strong and stable compared to other major nations of the world, facilitating the selection of the US dollar as the global currency in international financial markets. This took place in 1944 at the Bretton Woods Conference in New Hampshire, shortly before the end of World War II (S. Sumner). Why not use the Canadian dollar or the Australian dollar or any other currency that is better than the US dollar? The main reason why the Canadian or Australian dollar or any other currency is not used better than the US dollar is due to their relatively lower strength and stability compared to the US dollar (Goldberg and Tille). The US dollar is a powerful currency and, having the basis of its strength in the US economy, it is not only used as a reserve currency but also as a financial instrument that transforms and consequently enhances global markets into attractive destinations for foreign capital ( Eichengreen and Mehl). Furthermore, the US dollar is the best currency due to the freedom of the US economy and the convertibility of the currency (Eichengreen and Mehl). Unlike other foreign currencies, the financial system in the United States is open and therefore the RMB can be traded on global currency markets. However, in the case of China for example, the Chinese yuan cannot be used as a reserve currency despite being supported by the world's second largest economy (Goldberg and Tille). This is because the financial system in China and many other countries is not open as it is strictly controlled by their respective governments. Therefore, being among the freest currencies and having a more open financial system makes the US dollar a better currency for global markets than the Canadian or Australian dollar or).