Does US Innovation Drive the Dollar’s Global Dominance?

by Dennis Crouch

In their recent article, Professors Mauro Bambi and Sara Eugeni from Durham University (UK) propose an intriguing hypothesis connecting patent-driven innovation with the global dominance of reserve currencies, particularly the US dollar.  They look at Patent Cooperation Treaty (PCT) applications over the years, including high-value “triadic” patent families and argues that higher patenting activities significantly influence central banks’ decisions to hold a particular currency as a reserve asset. Eugeni, Sara and Bambi, Mauro, Silicon Valley and the Greenback: Does US Innovation Fuel the Dollar’s Global Dominance? (Working Paper from June 26, 2025).

Figure 1 from their paper (above) visualizes this correlation: as a country’s share of PCTs increase, so too does the share of its currency in global reserves.