For over sixty years, the US dollar has been the world's central reserve currency. A reserve currency, also called an anchor currency, is a currency held in significant quantities by governments and institutions as part of their foreign exchange reserves (Carbaugh, 2011). As the world's reserve currency, the U.S. dollar is used worldwide as a medium of exchange and as a global currency for products traded on the global market. In recent years, the status of the US dollar has been challenged by a select few around the world. Leaders are unconvinced about the future of the U.S. economy as their deficits exceed record levels. The following analysis will discuss the history of the world's reserve currency, how the U.S. dollar became the currency of control, and the benefits the United States has derived from this currency of control. The analysis presented will also address the cause of growing concerns about the future of the United States as well as the consequences if the dollar were to lose its status as the world's reserve currency. Finally, alternatives to the dollar will be evaluated as well as what the United States can do to maintain the dollar's position. History of the World Reserve Currency During the 1800s and first half of the 1900s, the British pound was the primary global reserve currency. Due to World War II, Britain accumulated a high amount of debt and lost its status as the world's reserve currency. As the value of the pound sterling declined, the American economy became stronger after the war due to a huge influx of gold into the states and rapid economic development. After World War II, the international financial system...... middle of paper ... ...we are facing a growing deficit that is not expected to continue indefinitely. The U.S. deficit has been closely scrutinized by world leaders who are pushing for the dollar to be replaced as the world's reserve currency. No matter what policy changes are made, any changes will have a negative impact on the U.S. economy. The United States has not lived within its means for several decades, which is the direct cause of the large deficit. Instead of continuing to ignore the deficit, it is time for the United States to take responsibility for its actions and face the consequences. The first step would be for the United States to stop using stimulus packages and bailouts to intervene in economic cycles. Citizens of the United States don't want to experience another Great Depression, but this might be the best option right now..