U.S. Dollar Forever? An Interview With Catherine Schenk by Gail Fosler

Published on: Author: guwebteam


Gail Fosler has interviewed Professor Catherine Schenk on the role of the dollar in the international monetary system – the full interview transcript is available on Gail Fosler’s website.


Global trade and financial systems have experimented over the centuries with a variety of alternative monies to support trade and global financial transactions, and for holding excess reserves when trade and/or investment surpluses mount. The U.S. dollar has dominated as the currency of preference for global trade and finance since the 1970s, although it emerged as a global currency as early as the 1920s. Since the U.S. dollar plays such a central role in the global economy, we interviewed financial historian Catherine Schenk on her outlook for the U.S. dollar as a global reserve currency.

GF: Given the rise of other global economic powers like China and the emergence of new currencies like the euro, does the U.S. dollar risk becoming obsolete as a global currency?

CS: To the contrary, the U.S. dollar has shown remarkable resilience. The dollar’s value in other currencies seems to rise and fall in 10-year cycles. It declined through most of the 1970s, rose until the mid-1980s, fell from the late 1980s to 1992, rose again until 2002 and then declined until the global financial crisis of 2008. Despite all of these ups and downs, the U.S. dollar still accounts for more than 60 percent of foreign exchange reserves (see chart) and is involved in about 80 percent of global foreign exchange trades.


See the rest of the interview on Gail Fosler’s website.