MAMOKETE LIJANE: US monetary crisis could have knock-on effect on all countries
Global investors and sovereigns cannot quickly and cheaply replace the dollar monetary system
My past three columns argued that financial markets were at risk from the potentially negative implications of US policy on global growth. But the focus was on trade policy. I underappreciated the risk to settled monetary orthodoxy that could yet come from this administration.
The dollar is the global reserve currency, the currency by which states save. Central banks worldwide use their dollar holdings, typically held in US Treasury instruments, to secure the value of their country’s currencies. The dollar is the world’s indexing currency, the currency in which others are quoted and by which every asset is valued. ..
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