Exorbitant Privilege The Rise And Fall Of The Dollar

The United States is a powerful country with a powerful economy. It has a huge presence in the international market and this is due primarily to its exorbitant privilege. Exorbitant privilege is the benefit that the US is able to enjoy due to the dollar’s status as the currency used for international reserves. Many economists have criticized this privilege of the US, including Barry Eichengreen. Eichengreen presents the argument that the dollar should not be the only currency that is used in the International Monetary System (IMS) and that despite its history, it no longer has a reason to be the only currency in the global economy, believing that the IMS would benefit from having multiple international currencies. He argues this by presenting the history of the economies throughout the world that have led to this point. His presents his argument in his book Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System. The dollar is the most widely used and most influential currency throughout the globe. This has allowed it to do many things including having other countries rely on it. This allows the US to exert its influence internationally. This also lets the US keep the possibility of a balance of payments crisis near improbable. This is because other countries trust in the dollar and its safety. When other countries buy our bonds or provide loans, they do so in dollars. This is advantageous to the US because it allows us toShow MoreRelatedThe Limitations Of Contemporary Currency Hegemony And The Transition1314 Words   |  6 Pagesis of overwhelming benefit, largely interpreted via the gains made by the US as the issuer of the dollar. These benefits have been both political and economic in nature, as discussed in the previous chapter. 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