What is the proper role of the dollar? This is a trillion-dollar question. The recent economic...

 

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What is the proper role of the dollar? This is a trillion-dollar question. The recent economic turmoil has intensified this global debate. For eight decades, the dollar has reigned supreme in the global economy. It was the world's official reserve currency between 1944 and 1973, and has been the unofficial reserve currency since 1973. Although the US share of the global economy has fallen- relative to its rivals-and its politics have turned inward, the dollar remains indispensable. 1. How does the world's reliance on the dollar help US firms trade and invest around the world? 2. From the standpoint of U.S., do the pros of the "exorbitant privilege" of the dollar outweigh its cons? What is the proper role of the dollar? This is a trillion-dollar question. The recent economic turmoil has intensified this global debate. For eight decades, the dollar has reigned supreme in the global economy. It was the world's official reserve currency between 1944 and 1973, and has been the unofficial reserve currency since 1973. Although the US share of the global economy has fallen- relative to its rivals-and its politics have turned inward, the dollar remains indispensable. 1. How does the world's reliance on the dollar help US firms trade and invest around the world? 2. From the standpoint of U.S., do the pros of the "exorbitant privilege" of the dollar outweigh its cons?

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1 The worlds reliance on the dollar provides several advantages for US firms in terms of trade and i... View the full answer