What happens if the US$ is replaced as the world reserve currency?
The international financial arena is characterized by the prevalence of the US dollar as the world’s reserve currency. Nonetheless, historical precedent indicates that the status of reserve currencies can undergo transformation over extended durations, with substantial shifts rarely occurring suddenly. Below are potential outcomes in the event of a gradual erosion of the dollar's prominence as the leading global reserve currency:
· economic consequences
Throughout history, changes in the status of reserve currencies have typically unfolded over extended periods rather than abrupt shifts. If the dollar's prominence were to wane, the US could potentially encounter decreased capital access, elevated borrowing expenses and a reduction in stock market valuations. The dollar's role as the global reserve currency has enabled the US to sustain considerable trade imbalances and government expenditures; a move away from the dollar could necessitate substantial economic adaptations.
· unc…
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