For decades the dollar has served as the world's main reserve currency, but, argues Barry Eichengreen, it will soon have to share that role. Here's why—and what it will mean for international markets and companies.
"The greenback [...] is not just America's currency. It's the world's." The dollar's three pillars are:
- depth of markets
- safety, stability, liquidity
- lack of alternatives
Three things that are changing are:
- technology eases the problems of multiple currencies
- rivals: the Euro and the Chinese Yuan
- loss of confidence
The U.S. government has a history of honoring its obligations, and it has always had the fiscal capacity to do so. But now, mainly as a result of the financial crisis, [...] questions will be asked about whether the U.S. intends to maintain the value of its debts or might resort to inflating them away.
No comments:
Post a Comment