Will the U.S. dollar remain the predominant reserve currency?
The Bretton Woods currency system gave way in 1973 to floating rates, with the dollar as the world’s main reserve currency. For all the questions about the dollar’s reliability as a reserve currency, its value strengthened during the crisis as it offered investors a safe haven. The United States is incredibly fortunate that the dollar enjoys this special status. When I work with countries struggling to pay for budgets or finance trade deficits, I reflect on how Americans do not spend a moment considering the unique advantages of being able to issue bonds and print money freely. The histories of the Napoleonic wars tell of great campaigns and battles, but the ultimate victory of Britain and its coalition depended on the dry chapter about Pitt’s restoration of Britain’s credit. The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency. Looking forward, there will increasingly be other options to the dollar. Given the ECB’s rece
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