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All that but most of all, the fact USD is the world reserve currency is the biggest privilege. Every other countries have to stock up on USD/ have swaps in pla
by creakingstairs 4y ago
All that but most of all,
the fact USD is the world reserve currency is the biggest privilege. Every other countries have to stock up on USD/ have swaps in place and follow US when they raise fed interest rates instead of doing what’s best for the domestic economy.
For example, South Korea’s USD reserves has been sharply going down as they’ve been trying to resist following the recent rate hikes to soften the blow to the economy. This is happening all across the globe.
However, US can do (and seems to be doing) whatever they want.
- Beached 4y agowithin reason of course. it's a position of privilege, but that position used to below to the UK. they lost that position over/after the world wars, and we got it. it is possible that doing whatever we want could push people to the euro as the reserve or the pound. it seems far fetched, but I could see a world where the euro the the world's reserve currency
- TexanFeller 4y agoThe yuan may be the competition we should fear. Since we disconnected Russia from our financial systems, Russia is willing to do business with our biggest rival, China, in their currency.
- 64bittechie 4y agoWell, what do you expect? The US over the past several decades has effectively crippled economies for its own interests by cutting off USD access. When you do this to a non-trivial number of countries they get around it by trading among themselves and dumping the USD for their own currencies. There are many countries including India, Japan, Korea, China, Russia, etc who are opening up bilateral or trilateral agreements to trade in their own currencies bypassing the USD. The US has pissed off a significant portion of the world that its days as reserve currency are certainly numbered. However, unbelievable it might sound today but the world is inching closer to non-USD centric future.
- refurb 4y agoIm not sure you understand what reserve currency means. When Korea buys something from Japan, they don’t have to pay in USD. They can use whatever currency they want.
- pjc50 4y agoThe yuan has capital controls. You can't move money freely in and out of China even (especially) if you're a Chinese national. Absolute non-starter for any kind of reserve currency idea.
- dtech 4y agoFor now. China has been actively working on making the yuan a world reserve currency [1], including relaxing the controls if it is adventageous. [1] https://finance.yahoo.com/news/putin-strengthening-yuan-role-russia-212300796.html https://finance.yahoo.com/news/putin-strengthening-yuan-role...
- refurb 4y agoThat would require a wholesale change in the way the Chinese government wields it power. Money flees China now despite the capital controls. Even the Chinese would rather keep their money in Singapore, Switzerland or the US than at home.
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- TheOtherHobbes 4y agoThe privilege is maintained by having the biggest military force in the world - which is why the UK used to be in that position, and the US is in that position now. It's not inconceivable China could take over. Russia won't (lol...) and the EU doesn't have much interest in becoming militarised.
- plonk 4y agoDoes anyone seriously believe the US military is forcing the world to use dollars? What’s the leverage? Does France get invaded if the Euro becomes too important?