> Thankfully there are alternative currencies that can be used for that nowadays.

Iraq and Libya have tried, and look what's happened to them ...

The main reason countries are using the USD as the reserve currency is because if they don't, the "Free World TM" will bomb them back to the stone age.

This argument has always struck me as silly to conspiracy theory. The EU has its own reserve currency!

The current state of the aforementioned countries would prove otherwise, I'm afraid.

But the missing link is the reserve currency question, rather than .. all the other disputes involved!

Which would those be?

Euro to start with, it's quite stable (and even appreciates against the dollar).

Depending on risk profile, desire for diversification and acceptance of variability, swiss francs, british pounds, chinese yuan, indian rupee, japanese yen, south korean won, etc. can also be used.

> Euro to start with, it's quite stable (and even appreciates against the dollar).

There's not enough euro issuance to replace Treasuries, and issuing more (particularly at EU level where it would really help) is super, super controversial.

Not really. You have seen what the US (under multiple administrations) does to countries that try to switch away from the dollar. Even China and Russia have issues trading in their own currencies with each other - to name the top two "enemies" of the US. What options do you think smaller countries have?

The issues these countries have are largely self-imposed. For example, China's struggles with international trade have a lot to do with their capital controls.

Small countries would probably have an easier time of it because they can just trade however they like without having to mollify their own bureaucrats. The traders will figure it out. The threat of US intervention is real, but I wouldn't be certain about whether it gets more or less pressing for smaller countries. The US probably won't even notice what they are doing if they keep quiet enough. Oil trading would be a different story though.

> Even China and Russia have issues trading in their own currencies with each other

Because EU and US sanction Chinese banks and company that do that. What does that have to do with the exact currency? they’d have the same issue if they wanted to use dollars or euros (to answer your question € is the other option smaller countries have).