Peter Schiff has written a piece on the dollar and its declining status. He has been bearish on the U.S. dollar for quite a while now and expects it to continue its decline. However, he points out that the euro, the yen, and the yuan have flaws (besides being fiat currencies) that will make it unlikely that any one of them will replace the dollar. I generally agree with his reasoning and his critiques of these currencies.
Schiff goes on to say that he sees signs that the world is moving back to gold. I like his optimism and he may certainly end up being right. As fiat currencies continue to fail and as 21st century technology helps spread the reasons why, then there should be more of a push for using gold (and possibly silver) as money. If the governments of the world are forced to loosen their grip and at least get rid of legal tender laws, then the market may head in the direction of gold.
I would like to offer another scenario too. While I like the idea of gold being used as money and think that may be the ultimate outcome, I see another possibility developing. With our current technology, most money is transferred with digits instead of actual bills. It is easy to make an entry on a computer, just as banks do all the time.
So my question is, why do we need a world's reserve currency? In the past 65 years or so, the U.S. dollar has been considered the world's reserve currency. This means that countries around the world use dollars in major trading. For example, if Japan buys oil from Saudi Arabia, they will use U.S. dollars. But again, why is it necessary to have a world's reserve currency, whether it is official or unofficial?
Let's say Japan wants to buy oil from Canada (and this example works whether we are talking about private companies or governments). Instead of using U.S. dollars, Japan can just use their own currency. Japan can buy the oil in yen. Then, Canada can convert the yen into Canadian dollars on the open market. If Canada (again, a private company, individual, or government) wanted to keep the yen and save it for a rainy day, that would be fine too.
With our current technology and open trading of currencies, it is easy to trade and convert currencies in the open market. Countries like China that have currency controls would either have to loosen those controls or else they could continue to use dollars or any other currency of their choosing.
Peter Schiff is right that the U.S. dollar is losing its status as the world's reserve currency. It won't matter much in the long run except that the U.S. government and the U.S. consumer will no longer be subsidized.
The central banks around the world have done a horrible job of managing their currencies (not that a currency should be "managed"). Fiat currencies are beginning to blow up in their faces. The average person will pay a price for this. The price will be higher consumer prices. It will hurt. Hopefully, it will be beneficial in the long run if enough people realize that we should not allow governments and central banks a monopoly over our money.