Why the Dollar will remain the World's Reserve Currency

After my recent post on the (questionable) value of a countries' currency being a reserve currency, I wanted to follow up with an excerpt from a brilliant article by Bill Emmott, former Editor of The Economist. The article itself is about the issues facing the US and the rest of world in the years ahead, both politically and economically. It really is a great article and worth reading, but what I wanted to point out here is a very good argument for why it is unlikely that the Dollar will cease to be Reserve Currency of choice any time soon:

The first point to be made is that the dollar's role in global foreign-exchange reserves was much smaller in 1990 (50 percent of global reserves) than it is today (about 63 percent), so even a fresh decline in its use would not be path-breaking. The second is to ask what the alternative is: the euro, the currency of a region that has gone into recession more quickly than the United States, and whose banks are just as troubled? And not, certainly, China's yuan, unless that country's leaders are poised to surprise us all by making it convertible and reducing controls on capital flows, both of which are necessary before a currency can take on reserve status. By default, the dollar is likely to keep its leading role. Whether the United States will again be a beacon of economic policy and performance depends on how bad its recession proves to be and on how well it adjusts to a new period of higher household savings and lower consumption and debt.