Back in 2007 I didn't understand why mortgage defaults on domestic houses in the US could cause the World's entire banking system to come to a screeching halt ... the so-called GFC.
How things are priced, whether in $US or Yuan, is similarly arcane. In a nutshell it is about control.
Currently, if the US initiates diplomatic action against another country their weapon of choice is economic sanctions. The status of the $US as the World's reserve currency [i.e. all major trade has to be done using $US's] gives the US the ability to simply cut off another country's access to the credit markets ... meaning US sanctions are something to be feared. Over the last several years an alternative financial trading system has gradually formed in which countries like Iran, Russia and China have developed the means to avoid the full effect of US imposed sanctions on their economies.
The $US is still [and likely to remain so for quite a while yet] the dominant World currency. The interest rates that central banks set is intimately connected to the fact the $US is the most important factor. It gets complicated when you have to include the $US debt and the strength of its economy. Trump has enacted tax cuts, which reduces the Gvt's capacity to service its debts, the US FED is raising rates and simultaneously reducing how much debt it is holding [i.e. unwinding its rescue policies enacted in response to the GFC]. Part of the process for the US to correct the imbalances is they retain the capacity to roll over debts by issuing more US Treasuries [UST's] as the old debts come due ... effectively never having to repay the capital and just running an interest only deficit. If [when] the $US loses the status of reserve currency that will signal a major reset for how the entire World conducts business.
(20min delay)