Network Effects and Inertia:
Fact: The USD dominates global finance—Wall Street, US Treasury bonds (~$33 trillion market), and major institutions (IMF, World Bank) operate in dollars.
Why: Decades of dominance create a self-reinforcing cycle. Switching to another currency (e.g., yuan) faces massive coordination hurdles.
Impact: Even challengers like China can’t quickly displace USD’s entrenched role.
Safe-Haven Status:
Fact: During crises (e.g., COVID, Ukraine war), investors flock to USD assets (Treasuries, cash).
Why: The US is seen as a stable refuge compared to riskier markets. Deep, liquid US markets absorb global capital easily.