Here’s the alternative to U.S. dollar dominance — and it’s not a rival currency, gold or bitcoin

The global financial system has a fundamental issue in that it is overly dependent on the U.S. currency.

Yes, the United States has the greatest economy in the world, but the dollar accounts for 40% of global trade and 60% of the world's foreign exchange reserves.

Despite the fact that the U.S. GDP accounts for only 5% of global output and represents a counterpart in 10% of all commerce,

Additionally, the U.S. has turned the dollar's monopoly in the financial system into a weapon over time, most recently by freezing Russian reserve assets at the start of the Russia-Ukraine conflict.

While not all nations are necessarily preparing such aggressive actions, not everyone is in favor of the United States making the decisions.

This has sparked speculation that another currency or currencies, gold, or even bitcoin, would take over the role of the dollar as the world's reserve currency.

Each of those alternatives, however, has drawbacks, from convertibility in the case of China to cyclicality in the case of the euro.

The market does not view any competition as a particularly enticing alternative, as evidenced by the U.S. dollar DXY, 0.03 percent trading around a 20-year high.