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Ya think?? Question is whether it will be in our lifetimes

Posted by Buygold @ 20:01 on February 12, 2019  

Fed Warns Dollar “Might Not Retain Its Dominance Forever”

“….recent trends bear watching as history suggests that a currency’s dominant status is not immutable.”

But why now? Because just like Mnuchin’s calls to banks to comfort the public that they have sufficient liquidity sparked questions why is Mnuchin suddenly concerned about bank liquidity, so the recent focus on the viability of the dollar’s reserve status, first by the Treasury Department’s smartest Wall Street advisors, and now – by the Federal Reserve itself – is… a little troubling.

In any case, this is how the authors set the stage:

This post checks the status of the dollar, considering whether any erosion in the dollar’s international standing has occurred. The evidence to date is that the dollar remains the world’s dominant currency by broad margins. Alternatives have not gained extensive traction, albeit this does not rule out potential future pressures.

So nothing to worry about? Well, not really.

First, the good news: as the blog writes, since the global financial crisis, “central banks have accumulated official reserves more extensively to self-insure against dollar-funding market disruptions.”

Indeed, many foreign investors and central banks are major holders of U.S. Treasuries, as these represent deep and liquid dollar investments. (See the next chart.) The dollar is the principal anchor currency for about 65 percent of countries with fixed or managed exchange rate arrangements. These countries account for approximately 75 percent of world output.

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Post by the Golden Rule. Oasis not responsible for content/accuracy of posts. DYODD.