By PHIL THORNTON (COURTESY OF THE WALLSTREET JOURNAL)

The World Economic Forum has often served as a launch pad for attacks on the dollar. At Davos two years ago, the billionaire financier George Soros predicted the dollar’s status as the world’s reserve currency of choice was under threat. Last year, Russian Prime Minister Vladimir Putin claimed the world’s over-reliance on the dollar posed a danger to the global economy.

There is little sign of that reliance diminishing just yet. In the year following the collapse of Lehman Brothers, foreign holdings of U.S. Treasuries rose 15.6% to $2.38 trillion. But currencies trade heavily on confidence and there are worries that such attacks are having a cumulative effect. Although the dollar has risen recently against the euro, the U.S. currency has lost over a quarter of its value since reaching its peak trade-weighted exchange rate eight years ago this month.

Prof. Joseph Stiglitz of Columbia University and a former World Bank chief economist, wants to see an “orderly transition” from a dollar-based global economy. “It is peculiar that we still have the dollar system when we are so globalized,” he says. “[There is a] need for a new global reserve system to replace the dollar-based system.”

With the U.S. government committed to spending trillions of dollars underpinning the financial system and supporting the economy, inflation remains a real possibility. This would further debase the value of the greenback.

This is a worry for many countries, especially emerging-market nations that hold vast quantities of dollar-denominated debt, often in the form of Treasury securities. Not only has the value of the dollar fallen, but with official interest rates close to zero and yields on bonds at record lows, the dollar has started looking like an unappealing asset to hold.

Some central banks have acted on their worries. In December, South Korea signalled its intention to restructure its $245 billion of reserves and diversify out of the dollar while both China, which holds $2.2 trillion, and India have mulled plans to swap dollars for gold.

Figures from the International Monetary Fund show that the share of foreign-exchange reserves held in dollars by central banks resumed a downward trend in the third quarter of last year. The dollar’s share has declined to 61.6% from 71.6% in the first quarter of 2002, when the currency hit its peak.

Prof. Benjamin Cohen at the University of California, Santa Barbara, believes the dollar’s prospects are being driven by the relative economic outperformance of developing nations. “Some movement away from the greenback can be expected as the center of gravity in the world economy shifts towards China, India and the other emerging markets,” he says.

Ann Pettifor, executive director of Advocacy International, who campaigns for debt-relief for poor countries and wrote the 2006 book “The First World Debt Crisis,” argues that this redistribution of economic power requires a radical reform of the global financial architecture. “We have to end the role of the U.S. dollar as the global reserve currency,” she says. “It is a large injustice that poor countries are obliged to hold Treasury bills.”

But what could replace the dollar as the global reserve currency of choice? One option would be for existing currencies—the euro, Japanese yen or Chinese yuan—to take a more prominent role. Each has problems. Although the euro represents 25% of central-bank reserves, it is not backed up by the political, military and diplomatic clout that investors look for in a reserve currency. The same goes for the yen. China may have those three attributes in spades but won’t achieve reserve status until the yuan is allowed to float and is traded beyond the country’s borders.

Another option is the Special Drawing Right, the international reserve asset created by the IMF. This is an idea that has the backing of both China and Russia. However, the SDR is not a currency in its own right. Instead, it is a potential claim on the currencies of IMF members. Prof. Cohen describes it as the “dark horse” in the race against the dollar, pointing out that it would have difficulty attaining “even a minimal level of credibility.”

Ms. Pettifor opposes using the SDR because she believes that the IMF is too tightly controlled by the Group of Eight, the forum of large developed nations, to the detriment of emerging economies. She favors an idea set out by the U.K. economist John Maynard Keynes for a truly independent global central bank with its own currency.

IMF Managing Director Dominique Strauss-Kahn warns that the idea of an independent global currency has been around for 65 years but nothing has been done about it.

The dollar’s rise to dominance took time—slowly taking over from sterling between the end of World War I until the U.K. government devalued the pound by 30% in September 1949, when its exchange rate against the U.S. dollar was slashed to $2.80 from $4.03.

Prof. Cohen believes the decline of the dollar’s reserve status is also likely to take decades rather than years. He worries that this will create a monetary vacuum that would present the constant risk of instability for global finance and world trade. “The economic and political impacts of a more fragmented currency system could be considerable,” he says.

Mr. Strauss-Kahn is also convinced that we are moving from a single-currency world into a multicurrency environment. “But I don’t see the role of the dollar changing rapidly in the direction of a smaller role,” he says. “[That] does not mean that over the coming decades the role of other currencies including the euro cannot be bigger.”

Mr. Strauss-Kahn adds that an alternative to the dollar has been debated since the IMF was founded 65 years ago. “Maybe it will happen before the end of the next 65 years,” he says. “But certainly not during the next 65 weeks.”

— Mr. Thornton is a writer based in London . He can be reached at reports@wsj.com .  “