As evidenced by a number of recent policy changes in China, Russia, Saudi Arabia, and Brazil, the status of the US dollar as the world’s reserve currency is under coordinated attack. Efforts to dethrone the dollar, however, will require time and luck in favor of antidollar forces. For now, however, the US dollar is the most preferred currency for foreign reserves and for settling international transactions.
A Nation So Conceived: Abraham Lincoln and the Paradox of Democratic Sovereignty
by Michael P. Zuckert
University Press of Kansas, 2023; 416 pp.
As America faces the twin threats of inflation and bank failures, three U.S. congressmen introduced a pivotal sound money bill that would enable the Federal Reserve note “dollar” to regain stable footing for the first time in more than half a century.
Last week, Fox News aired a segment discussing the possibility that the US dollar will cease to be the global reserve currency and what that would mean for Americans. The tone of the piece suggested that a “catastrophic” decline of the US dollar was not only possible, but perhaps even imminent.
The collapse of California-based Silicon Valley Bank (and Signature Bank in New York) on March 10, 2023, sent shock waves through the international financial system. It not only made bank stocks and bank bonds fall sharply but also finally brought ailing banking giant Credit Suisse to its knees. The Swiss bank had to be rescued and was bought by UBS on March 19, 2023. In another wave of market fear, Deutsche Bank, another global systemically important bank, came under pressure: its share price fell sharply, and credit default swap spreads on its liabilities skyrocketed.
