Are the Dollar's Days Numbered?

A year ago, the dollar bestrode the world like a colossus. Now it is humbled and the euro looks triumphant. Is the dollar on the way out as the world's unchallenged reserve and trade currency? Or is "euro triumphalism" premature?

That question preoccupies not only speculators tracking the dollar's decline, but ordinary businessmen who wonder what currency to use when invoicing imports or exports. Indeed, the part that currencies play in world trade through their role in invoicing receives too little attention. Currently, the US dollar remains dominant. Most US exports and imports are denominated in dollars, and the dollar is extensively used in trade that does not involve America.

Since 1980, however, the dollar has lost ground. Estimates from the European Commission indicate that the dollar's share in world trade fell from 56% in 1980 to 52% in 1995 (the latest year for which statistics are available). The Deutsche Mark's share remained relatively unchanged between 1980 and 1995. The yen lags behind, but had the highest relative growth, with its share of world trade more than doubling from 2% in 1980 to almost 5% in 1995.

To continue reading, please log in or enter your email address.

To continue reading, please log in or register now. After entering your email, you'll have access to two free articles every month. For unlimited access to Project Syndicate, subscribe now.

required

By proceeding, you are agreeing to our Terms and Conditions.

Log in

http://prosyn.org/uzZG1Zy;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.