The reign of the US dollar

The US dollar is used by many other countries around the world beside the US, and this usage is called dollarization. Here is a list I have compiled (which may have some errors on it).

In countries that use the US dollar, the US profits by having them use it. A user of a US dollar is in effect giving an interest-free loan to the Federal Reserve. In countries that have a fixed-exchange rate to the dollar, or have a floating rate within a narrow band, the effect isn't quite as dramatic, but they are still tied into the US economy. Their local currencies are extensions of the US dollar.

If the dollar collapsed or went to hyperinflation, all these other countries would be directly affected. If the Fed monetizes some of the national debt, all of these other countries end up shouldering some of the cost.

My point here is to emphasize the unique position of the US dollar in the world.

Countries that officially use the US dollar
American Samoa
Bonaire, Saba and Saint Eustatius (formerly part of Netherlands Antilles)
British Virgin Islands
Cambodia
East Timor
Ecuador
El Salvador
Guam
Marshall Islands
Federated States of Micronesia
Northern Mariana Islands
Palau
Panama
Puerto Rico
Turks and Caicos Islands
US Virgin Islands
Zimbabwe

Countries that use currency pegged to the dollar
Afghanistan: 1 USD =45.2 afghanis
Aruba: 1 USD = 1.79 Aruban florins
Bahamas: 1 USD = 1 bahamian dollar
Bahrain: 1 USD = .376 Bahraini dinars
Barbados: 1 USD = 2 Barbados dollars
Belize: 1 USD = 2 Belize dollars
Bermuda: 1 USD = 1 bermudan dollar
Bolivia: 1 USD = 7 bolivanos
Cayman Islands: 1 Cayman Islands dollar = 1.2 USD
China: 1 USD = ~6.49 yuan
Cuba: 1 USD = 1 Cuban convertible peso
Djibouti: 1 USD = ~ 175 Djibouti francs
Eastern Caribbean States: 1 USD = 2.70 East Caribbean dollars
Eritrea: 1 USD = 15 Nakfa
Honduras: 1 USD = 18.89 honduran Lempiras
Hong Kong: 1 USD = ~ HK$7.8
Iraq: 1 USD = ~1200 Iraqi dinars
Jordan: 1 USD = 0.709 jordanian dinars
Lebanon: 1 USD = ~1500 Lebanese pounds
Liberia: 1 USD = ~72.5 Liberia dollars
Macau: 1 USD = ~8 Macanese patacas (1 MOP$=1.03 HK$)
Maldives: 1 USD = 12.85 maldivian rufiyaas
Myanmar: 1 USD = 6.51 kyats
former Netherlands Antilles: 1 USD = 1.79 Caribbean guilders
Oman: 1 USD = .385 Omani rials
Qatar: 1 USD = 3.64 Qatari riyals
Saudia Arabia: 1 USD = 3.75 Saudi riyals
Taiwan: 1 USD = 32.84 NT$
Trinidad and Tobago: 1 USD = 6.25 Trinidad and Tobago dollars
United Arab Emirates: 1 USD = 3.6725 UAE dirhams
Venezuela: 1 USD = 2.60 Venezuelan bolivars

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I see that there are 4 categories of countries that use the US dollar. First are those nearby small countries whose economy is dominated by the US, such as the Bahamas. Second, those whose economies are completely unstable and see the dollar as being stable, such as East Timor and Zimbabwe. Third, the oil producing countries, and fourth, China and chinese territories.

It is the last 2 categories that are important. The oil-producing gulf countries could create their own currency, such as the GCC Dinar and demand that it be used to buy oil. However, this is only in the conceptual stage. China could make the yuan convertible; however, it is still tightly controlled. Here is an article about making the yuan convertible, which says that it will be fully internationalized by 2020: For Yuan, Convertibility Countdown Starts Now

So still, there is no replacement for the US dollar anytime soon. Ironically one of the things that helps the dollar is that so much debt is issued in it.