A few days ago, Donald Trump told the Americans that “if we lost the dollar as the world currency…that would be the equivalent of losing a war”. Indeed, the U.S.’s reserve currency status does bring exorbitant privilege: First, it creates demand for dollars, thereby tending to reduce borrowing rates and keep them lower than they would otherwise be. Second, such reserves become important and very handy in fighting financial crises.
A Macro Market View by Hubert Marleau
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