Reserve Currency

Is it time for the US to disengage the world from the dollar?

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The week before last on Thursday the Financial Times published an OpEd piece I wrote arguing that Washington should take the lead in getting the world to abandon the dollar as the dominant reserve currency.  My basic argument is that every twenty to thirty years – whenever, it seems, that American current account deficits surge – we hear dire warnings in the US and abroad about the end of the dollar’s dominance as the world’s reserve currency.  Needless to say in the last few years these warnings have intensified to an almost feverish pitch.  In fact I discuss one such warning, by … Read more

China Sees Conspiracy in Global Reserve Currency

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The topic of a reserve currency to replace the dollar never gets old, and the logic behind it is a bit fuzzy. First and foremost, why is the dollar the reserve currency of choice? Does America threaten to bombard any country that chooses to keep its reserves in euros, yen, Swiss francs, or gold, instead of adorable Benjamin Franklins? Let’s look at the landscape first. The Financial Times published the article “The best alternative to a new global currency,” authored by Joseph Stiglitz, a recipient of the Nobel Prize in Economics in 2001. Mr. Stiglitz points out some issues, as … Read more