The dollar's reserves of strength
The freezing of Russia's reserves has led to predictions of the US dollar's demise as the world's reserve currency of choice. But it may not be time to write the greenback off just yet.
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Gene Frieda
LONDON • The freezing of much of Russia's official foreign reserves has inevitably led some again to predict the imminent demise of the dollar's "exorbitant privilege" as the world's reserve currency of choice. But we should not write the greenback's obituary just yet.
On its own, the sanctioning of Russia's reserves will likely reinforce the primacy of the dollar as the backbone of the fiat currency system. Only if the United States were regularly to use such financial sanctions as an offensive foreign policy weapon might a more rapid erosion in the dollar's status occur.