on why a shift in reserve currency matters

Question

I understand that the USD has become the defacto reserve and trade currency in the world post WW2, and that people put importance in this fact.
Isnt any currency traded therefore establishing values and liquidity, thus it doesnt really matter in what currency trade or reserves are undertaken?

In: 2

Answer 1

Being the de-facto world reserve currency gives a lot of power to US institutions. It’s easy for the US to borrow money, and much of the worlds trade is conducted in US dollars.

Another big advantage is that it makes it a lot easier for the US to impose sanctions on other countries.

This may be one of the big reasons the BRICS countries are trying to shift the reserve currency to the Chinese Yuan. It makes it that much harder for the US to impose sanctions on them, particularly since political tensions between the US, Russia, and China are very high right now.