Scott Bessent, the Treasury Secretary nominee for President-elect Donald Trump, has pledged to uphold the dollar’s status as the world’s reserve currency, aiming to usher in a “new economic golden age”.

What Happened: As reported by Reuters, Bessent, who is set to face the U.S. Senate Finance Committee on Thursday, underscored the significance of the dollar’s position in his prepared testimony. He suggested that the upcoming Trump administration should concentrate on productive investment to stimulate economic growth, rather than “wasteful spending that drives inflation.”

Bessent also emphasized the need to protect vulnerable supply chains from strategic competitors and advocated for the judicious use of sanctions as part of a comprehensive government strategy to meet national security needs. “And critically, we must ensure that the U.S. dollar remains the world’s reserve currency,” Bessent stated in his remarks.

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Why It Matters: Bessent’s commitment to maintaining the dollar’s global reserve status comes amidst a backdrop of investor confidence in the U.S. dollar during Trump’s second term, despite uncertainties surrounding his proposed economic policies. Currency traders have steadily boosted the dollar’s value against major international currencies since election night, signaling faith in American economic dominance.

Moreover, Trump’s recent stern warning to the BRICS nations against shifting away from the U.S. dollar underscores the incoming administration’s commitment to maintaining the dollar’s dominance. This stance is further reinforced by Bessent’s remarks on securing vulnerable supply chains and using sanctions to meet national security needs.

However, the dollar’s recent dip, ahead of bank earnings reports, suggests that the path to maintaining the dollar’s global reserve status may not be without challenges.

The dollar index, a measure of the greenback’s strength against a basket of six other currencies, hit a 26-month high of 110.17 on Monday. The index saw a decline of 0.11% to 109.06 on Tuesday morning.

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This story was generated using Benzinga Neuro and edited by Shivdeep Dhaliwal