IMF-World Bank Policymakers Warn Dollar Could Lose Reserve Status as US Inflation Hits 2-Year High
Updated
Updated · The Jakarta Post · May 5
IMF-World Bank Policymakers Warn Dollar Could Lose Reserve Status as US Inflation Hits 2-Year High
1 articles · Updated · The Jakarta Post · May 5
Washington meetings of the IMF and World Bank surfaced broad concern that the US dollar could eventually lose its role as the world's main trade and reserve currency.
Trump's war against Iran and wider policy shifts drove the anxiety, with policymakers pointing to surging gas prices, inflation at a two-year high and risks of weaker consumer spending and higher unemployment.
Trust in US commitments is the central issue: after S&P cut the US rating to AA+ in 2011, capital still flowed in, but officials now fear that confidence is eroding more durably.
Rachel Reeves called the conflict "folly," and criticism of the abrupt USAID shutdown was cited as another sign that US soft power and reliability are weakening.
With China's payment systems expanding, is a bipolar US-China currency world now an inevitable reality for global trade?
Could today's energy crisis and aid disruptions unintentionally fast-track a global pivot to green energy and sovereignty?
Global Economic Shock 2026: Middle East Conflict, Oil Crisis, and the Accelerating Shift Away from the U.S. Dollar
Overview
In early 2026, the global economy faced a sudden downturn as war erupted in the Middle East, starting with joint U.S.-Israeli strikes on Iran and followed by Iranian retaliation. This conflict led to the effective closure of the Strait of Hormuz, a vital shipping route, due to attacks on commercial vessels and suspected sea mines. As a result, global oil supplies were severely squeezed, causing uncertainty in shipping and triggering sharp increases in energy prices. These disruptions broke a period of steady growth, deepened inflationary pressures worldwide, and forced countries to adopt urgent energy-saving measures and rethink economic policies.