The writer is a senior fellow at Harvard Kennedy School and chief economist at Kroll

Like the swallows of Capistrano, the dollar doomsayers have returned. The sanctions against Russia for its war on Ukraine are built around denying Russia access to foreign currencies, particularly the dollar, which dominates global trade and investment. It therefore must follow that countries wanting to avoid a similar fate would seek to diversify away from the US currency. There is a certain logic to that, but the reality is the dollar can’t be avoided and it will remain the dominant currency in trading and transactions.

Central banks have been diversifying their reserves and that will continue. The dollar’s share in foreign exchange reserves has fallen from 71 per cent in 2000 to 59 per cent in the third quarter of 2021. But this is still roughly triple that of the second-placed euro. One quarter of former dollar reserves flowed into renminbi. The remainder have gone into smaller economies like Australia, Canada, Singapore, South Korea and Sweden.