Ultimately, the question of whether the dollar will remain a global reserve currency answers itself. To misquote a famous authority on political economy, “A day may come when the dollar loses its central role as the dominant global reserve currency, but it is not this day.” It is not even this decade, and quite likely not even this century. It won’t even become a possibility until the E.U. becomes a true fiscal and political union — or until China develops an accountable liberal government and much more developed private financial markets and finally accepts the free movement of capital flows. None of those scenarios seems likely to happen soon.
Mark Copelovitch (@mcopelov) is professor of political science and public affairs and director of European Studies at the University of Wisconsin at Madison. He is the author (with David A. Singer) of “Banks on the Brink: Global Capital, Securities Markets, and the Political Roots of Financial Crises” (Cambridge University Press, 2020).