For more than 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 US dollar is used worldwide as a medium of exchange and is used as a global currency for products traded in the global market. In recent years the status of the US dollar has been contested by a select few around the world. Leaders are unconvinced about the future of the US economy as their deficits are surpassing record levels. The following analysis will discuss the history of the world's reserve currency, how the US dollar became the control currency, and the benefits the United States has experienced as a result of having the control currency. The analysis presented will also discuss the cause of the growing concerns about the future of the United States, as well as the effects if the dollar were to lose its status as the world's reserve currency. Finally, alternatives to the dollar will be evaluated and what the United States can do to maintain the dollar's position. History of the World's Reserve Currency During the 1800s and first half of the 1900s, the British pound was the world's principal reserve currency. Due to the Second World War, Great Britain accumulated a large debt and lost its status as the world's reserve currency. While the British pound lost value, the US economy became stronger after the war due to the considerable influx of gold into the states and rapid economic development. After World War II the international financial system... middle of paper... ...faced a growing deficit that is not expected to last indefinitely. The US deficit has come under scrutiny from global 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 and bailout packages to intervene in economic cycles. The citizens of the United States do not want to experience another Great Depression, but this may be the best option right now.