LONDON, Feb 28 (Reuters Breakingviews) – Reports of the dollar’s demise are greatly exaggerated. An erosion in the greenback’s share of global foreign exchange reserves, combined with rising geopolitical tensions, have rekindled talk of an end to the U.S. currency’s dominance. In fact, its lynchpin status remains unshaken. The outsized role played by the United States in capital markets, trade and debt reinforces the status quo. Unless the global economy undergoes a complete overhaul, the dollar will remain on top.
America may have never “run on Dunkin’”, as the donut-maker’s slogan claimed, but the global economy runs on the dollar. That makes many foreigners uneasy. Over-reliance on the American currency can lead to instability in emerging markets, dampen trade flows and create global spillovers, such as when financial markets melted down in March 2020.
This has been the case ever since…
