The British pound was displaced by the US dollar. Currently, the US dollar just doesn't have a proper rival. The euro, yuan and rupee are considered politically suspect (each for its own unique reasons); the pound and yen have too small a base. Without further transformation of the global financial system, the only alternative is for banks to hold a basket of currencies, and in such a basket the dollar would likely still play a significant, if reduced, role. This is a slow process because it means changing the nature of currency reserves from a single safe haven to a "nest". What this means for USG spending power is not immediately clear.
Ok, let's see - yuan isn't a freely traded currency, it's heavily regulated by China. From that alone it can not be used a reserve currency by anyone - unless they want to hand over all control over their assets to CCP.
The rupee is better, but there's not a lot of trust in Indian institutions globally, so black swan events are more likely. I can see it becoming a better proposition as India further matures and taps into its population more.
No, euro - that's a solid contender. Not only it's already used in a lot of countries, and therefore backed by more than one economy, the EU institutions are legit to a fault - they continuously refuse to seize Russian assets, because there's no solid legal grounds for it, despite all political will towards doing so.
That alone makes it far removed from being politically suspect in my book, unless there's some blatant case against the euro that I'm missing.
The main issue with the euro has been the stinginess of the ECB. The Fed always makes plenty of dollars available but during the Great Recession this was not the case in Europe. This is a problem for euro-denominated debt. (It is also a problem for the yuan.) The unusual political structure of the EU — not a single country — is also potentially concerning, as is its apparent dependence on the United States for defense.
> That alone makes it far removed from being politically suspect in my book, unless there's some blatant case against the euro that I'm missing.
Lack of integration/solidarity. A common currency is a pretty bad idea if economies are allowed to diverge (see previous sovereign debt crisis, there's no reason why eg France can't be the next trigger).
You need a common tax base, and solidarity across member (much more than the current state) to have an effective monetary policy.
The in-between status quo for EU really isn't great (either you need to keep building EU institutions/start having proper eu taxes and budget -- something that is not really popular at the moment--, or euro should be reconsidered). (From what I understand it's not really a controversial opinion in economic circles).
Who considers them politically suspect? I’m guessing the people who live in the countries that use them don’t, and on the contrary would increasingly be seeing the USD as politically suspect.
The people who live in the countries that use them aren't relevant, because we are talking about them as reserve currencies. What matters is whether other countries see them as politically suspect.
