The U.S. dollar’s “exorbitant privilege” remains

Otaviano Canuto

No 2322, Policy briefs on Economic Trends and Policies from Policy Center for the New South

Abstract: Recent initiatives and policy moves by China and other countries to extend the reach of use of the renminbi in the international monetary system, while the U.S. dollar share in global reserves has slightly shrunk in relative terms, have sparked frequent discussions about a hypothetical “de-dollarization” of the global economy. We approach here what that would mean in terms of global currency functions as means of payment and store of value. While we point out a relative decline of the U.S. dollar weight in those functions more recently, we also highlight gravitational factors that tend to uphold its position. Therefore, the “exorbitant privilege” that the U.S. dollar has provided to its issuer is likely to remain.

Date: 2023-04
New Economics Papers: this item is included in nep-mon, nep-opm and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:ocp:pbecon:pb_21_23

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