Seizures of foreign exchange reserves will not weaken the dollar’s role as dominant reserve currency

Michael Dooley, Peter Garber, David Folkerts-Landau 

Recent sanctions imposed by the US on Russia have called into question the US dollar’s dominant role as a reserve currency. This column argues that sanctions will, in fact, reinforce the dollar’s dominance rather than weakening it. It emphasises the importance of ‘collateral’ demand for reserves, especially by developing countries. Countries which choose to exit the dollar bloc will have restricted ability to reassure foreign investors, which could impact a growth strategy that involves participation of centre country capital.

Πηγή: Voxeu

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