The supreme imperial power, the US, imposed the 1944 Bretton Woods agreement on the world, elevating the dollar as the world reserve currency. The US made other states peg their own currencies to the dollar, itself pegged to gold at $35 an ounce. At that time, the US held three-fourths of world gold reserves. The US was the only nation that could print the globally accepted currency. The agreement also created the World Bank and IMF, US-backed organizations that helped oversee the new imperial set-up.
Unsurprisingly, the US did not keep its promise to peg $35 to one ounce of gold, and instead printed more dollars than it had gold to back. The US used these dollars to fund social programs and war spending during the 1950s and 1960s. By 1971, gold was valued at a rate closer to $200 an ounce, causing Nixon to take the dollar off the gold standard.
Ironically, since then, the global role of the dollar has only increased. US has used its power - diplomacy, threats, blackmail, favorable deals, sanctions, tariffs, coups, and military invasion to enforce the dollar role as the international currency.
The Role of the Petrodollar
After Nixon ended the convertibility of dollars into gold, the US needed a compelling new reason for foreign banks and governments to hold dollars. Given the importance of oil to any economy, Nixon replaced "dollars for gold" with "dollars for oil," black gold, through the petrodollar system. An oil-exporting nation's rulers get military backing from the US, and in return must price their oil not in their own money, but exclusively in dollars. They must buy US Treasury bonds with profits of their oil sales.
In 1971 the US told Saudi Arabia that it could charge what it wanted for its oil but had to recycle dollars from oil earnings back to the US. It would be considered an act of war if they didn't comply. The remaining OPEC countries soon followed suit.
Russia began switching to selling their oil in euros only last year. Venezuela and Iran have already moved off the dollar, but now the US uses cruel sanctions to block their oil's access to the market. Qaddafi's Libya and Saddam's Iraq met a worse fate when they moved to stop selling their oil for dollars.
The US Market Remains the World's Main Export Market
The US remains the biggest consumer market in the world, more than a quarter of world household consumption, amounting to $14 trillion in goods and services in 2018 (the equivalent of the European Union and China combined). Much of the Third World counts on the US market to drive their economic growth. These countries rely on cheap exports in order to keep their economy moving, so they cannot let their own currency rise in value relative to the dollar.
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