Dollar Rivals

Jeffrey Frankel

No 31476, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Written on the 50th anniversary of floating exchange rates, this paper deals with possible alternatives to a unipolar dollar-based system. It considers (1) measures of international currency use; (2) potential challengers to the dollar; (3) network externalities; and (4) the plausibility of gold and digital currencies, as alternatives to regular currencies. On the one hand, network externalities operate in favor of the status quo: the dollar as the single leading international currency. On the other hand, the danger of abuse of exorbitant privilege – for example, by debasing the currency or repeated use of sanctions – operates in favor of challengers. A good guess is that the dollar will continue to lose market share slowly to others, but will remain in the lead.

JEL-codes: F33 (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mon, nep-opm and nep-pay
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