The Dollar’s Role in the International Monetary System

Is the U.S. dollar’s dominance under threat? Since the global financial crisis and the emergence of the Chinese renminbi, speculation has been rampant about the dollar’s looming if not imminent displacement as the world’s leading reserve currency. And yet, a case could be made that the dollar’s role as a safe haven currency appears to have actually strengthened in the aftermath of the crisis.

On January 15, Global Economy and Development at Brookings hosted the launch of The Dollar Trap: How the U.S. Dollar Tightened Its Grip on Global Finance, featuring the book’s author, Brookings Senior Fellow Eswar Prasad. A panel of distinguished experts discussed the structure of international currency arrangements, including the roles and relative importance of the U.S. dollar and other reserve currencies. The panel included: Charles Collyns, managing director and chief economist of the Institute of International Finance; Jose De Gregorio, professor of the University of Chile and nonresident senior fellow of the Peterson Institute for International Economics; and Luis Alberto Moreno, president of the Inter-American Development Bank. David Wessel, founding director of Brookings’ Hutchins Center on Fiscal and Monetary Policy, moderated the discussion.