The Fate of the Dollar
During most of the twentieth century the US and the dollar have reigned supreme in the world. The dominance of the dollar as the leading international currency has both expressed US hegemony and also more recently helped to sustain it. As each year passes economic power is shifting more and more away from the US, and from the west in general, to China and the rest of the emerging economies. How much longer can the US expect to maintain its own currency as world money?
Questions to consider
· Over the long term what are the main determinants of a currency’s relative level?
· How did the $ attain its global role?
· What are the benefits to the US of issuing the main international reserve currency?
· Why is the $ perceived to be under threat as world money?
· What are the factors likely to sustain or undermine its current position?
Phil Mullan will introduce the discussion.
Twilight of Pax Americana, Christopher Layne and Benjamin Schwarz, LA Times, September 29 2009
Sterling’s Past, Dollar’s Future: Historical Perspectives on Reserve Currency Competition, Barry Eichengreen, April 2005
The Indebted Empire: America’s Current-Account Deficit Problem, Iwan Morgan, International Politics, 2008
United Nations, World Economic Situation and Prospects 2011, January 2011
International Monetary Fund, Reserve Accumulation and International Monetary Stability, April 13 2010
The People’s Bank of China, Zhou Xiaochuan: Reform the International Monetary System, March 23 2009