Grant Williams came on Excess Returns to reframe our modern understanding of the reserve currency debate. To do so, he took us all the way back to the foundational idea that the US dollar didn't organically emerge as the world's reserve currency. The post-WWII world needed it. Bretton Woods gave the system as we know it today its structure, and America proceeded to offer liquidity, scale, institutional stability that no other nation could match. For 80 years that foundation held. Not always steady, but certainly as a norm the world could rely on.
But currencies fade with use. The world quietly finds alternatives.
The Suez Crisis of 1956 offers the historical mirror. Britain wasn't destroyed militarily or economically. When the US refused to support sterling, every central bank learned a lesson: even the strongest currency carries political risk. Britain never recovered its reserve status.
The global financial crisis in 2008 planted doubts about dollar dominance. March 2022 changed the calculus. When the US froze Russian central bank reserves, it revealed that political alignment determines access to your own money. Central banks absorbed that in days.
The response has been unmistakable. Gold purchases hit generational highs. Treasury holdings flatten. China deepens its infrastructure and investment ties across Asia and the Middle East. Gulf sovereign wealth funds allocate capital eastward.
This is redirection happening in real time. Williams explains the 80-year arc that brought us here, why the next phase matters, and what comes next when institutions lose trust in the system itself.
Be sure to also read Grant's full essay on this exact theme for deeper historical analysis, There Can Be Only Two
