The Dollar Privilege

The dollar is the world’s primary reserve currency, accounting for $6.7 trillion in foreign reserves. This has given the United States what some have called “an exorbitant privilege,” allowing it to borrow easily and to levy painful sanctions. But could it lose this status?

Play Button Pause Button
0:00 0:00
x
Host
  • Gabrielle Sierra
    Director, Podcasting
Credits

Asher Ross - Supervising Producer

Markus Zakaria - Audio Producer and Sound Designer

Rafaela Siewert - Associate Podcast Producer

Episode Guests
  • Roger W. Ferguson Jr.
    Steven A. Tananbaum Distinguished Fellow for International Economics
  • Sebastian Mallaby
    Paul A. Volcker Senior Fellow for International Economics

Show Notes

In 1944, representatives from forty-four nations devised a new global financial system, anointing the U.S. dollar as the leading international reserve currency. Since then, the dollar has enjoyed the immense privilege of being the currency of choice for international trade and global reserves. This status allows it to borrow money easily, bounce back quickly from financial crises, and levy painful sanctions against other countries.  


In this episode, an economist and a former vice chairman for the U.S. Federal Reserve break down the real and symbolic benefits of the dollar’s status. They also assess the potential for competitors, such as the Chinese renminbi, the euro, and even cryptocurrency, to displace it. 

 

CFR Resources

 

The Dollar: The World’s Currency,” Anshu Siripurapu

 

The National Debt Dilemma,” James McBride, Andrew Chatzky, and Anshu Siripurapu

 

Good News! The Federal Reserve Is Surviving the Trump Era,” Sebastian Mallaby

 

The Dangerous Myth We Still Believe About the Lehman Brothers Bust,” Sebastian Mallaby

 

Tracking Currency Manipulation,” Brad W. Setser and Dylan Yalbir

 

Weaker Dollar Means More Dollar Reserves,” Brad W. Setser

 

From Roger Ferguson

 

What Ex-Fed Governor Roger Ferguson Learned on 9/11,” Fortune

 

Read More

 

The dollar’s international role: An ‘exorbitant privilege’?” Brookings Institution

 

US debt to China: how big is it and why is it important?South China Morning Post

 

Will bitcoin end the dollar’s reign?Financial Times

 

Dollar Hegemony Is Under Fire From China’s Rapid Growth Recovery,” Bloomberg

 

GameStop Stock Jumps to New Record,” Wall Street Journal 

 

Massachusetts regulator says GameStop speculation is a danger to the whole market, as TD Ameritrade restricts trading,” CNBC

 

Does Trump Have the Legal Authority to Demote the Federal Reserve Chairman?New York Times

 

Watch and Listen

 

The Dollar At The Center Of The World,” Planet Money

 

TIAA’s Roger Ferguson on Avoiding a Double-Dip Recession,” Leadership Next

India

Prime Minister Narendra Modi is the most popular man in India. On track to be elected for a third term, he has transformed the country’s economy and global standing while silencing dissent and galvanizing majoritarian support for his Hindu nationalist agenda—all while growing closer to the United States. How could Hindu nationalism reshape India?

Media

In a wide-ranging conversation, Foreign Affairs Editor Dan Kurtz-Phelan joins Why It Matters to discuss nonpartisan publishing in a polarized political climate, the state of press freedom around the world, and the future of journalism.

Genocide and Mass Atrocities

Thirty years ago, Rwanda’s government began a campaign to eradicate the country’s largest minority group. In just one hundred days in 1994, roving militias killed around eight hundred thousand people. Would-be killers were incited to violence by the radio, which encouraged extremists to take to the streets with machetes. The United Nations stood by amid the bloodshed, and many foreign governments, including the United States, declined to intervene before it was too late. What got in the way of humanitarian intervention? And as violent conflict now rages at a clip unseen since then, can the international community learn from the mistakes of its past?

Top Stories on CFR

Kenya

During Kenya’s state visit, the United States should work toward building a more resilient model of U.S.-Africa partnerships.

 

Iran

Ebrahim Raisi was more loyal to hard-line Supreme Leader Ali Khamenei than previous presidents, and whoever succeeds him is likely to be just as conservative.