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It depends. US dollars held by US banks, probably yes. US dollars held as reserves by foreign central banks, such as say, the central bank of Iran, I don't th
by lottin 6y ago
It depends. US dollars held by US banks, probably yes. US dollars held as reserves by foreign central banks, such as say, the central bank of Iran, I don't think so. These are reserves in the form of physical dollars and bank deposits, typically not in a US bank. There is no way the Fed can make them disappear.
- toast0 6y ago> There is no way the Fed can make them disappear. There's no US precedent, but US government could do something like India's 2016 Demonitization: require new notes, exchange current notes for a limited time only, also limited per person. This might not completely wipe out foreign physical USD holdings, but it would probably make a dent; logistics alone for replacing all the bills would make a dent. That said, I don't think there's any reason for the US government to do such a thing, and it would most likely lead to significantly lower confidence.
- wizzwizz4 6y agoExcept declaring those dollars “not legal tender”, of course. But that's more likely to weaken their control over the dollar than actually destroy the dollars.