- US Treasury securities,
- international reserve currency,
- international trade,
- Special Drawing Rights (SDRs)
The United States' exploding debt and deficits have raised concerns about the future of the dollar. Are the days of the dollar as the world's reserve currency numbered? If this is the case, what will replace the dollar? More ominously, is the world entering a new era of "currency wars" - where each nation resorts to a "beggar-thy-neighbor" strategy of intervening in exchange rates to capture market share from competitors? The following paper argues that despite challenges to the US economy, the immediate future of the dollar is secure-in part, because there is no alternative on the horizon. However, currency manipulation and competitive devaluation is a growing problem, potentially resulting in low-level trade conflicts that could derail the global economic recovery.
Copyright © Samsung Economic Research Institute 2011
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