- Dollar’s Days as World’s Most Important Currency are Numbered – Berkeley Economics Professor
Currencies will soon coexist on a more ‘equal footing’ in international markets, and the US dollar will be forced to share prominence with the Chinese yuan and the EU’s euro, according to global currency systems expert Barry Eichengreen.
In his book How Global Currencies Work: Past, Present, and Future, he wrote that reserve currences can and do coexist. The book, co-authored by European Central Bank economists Arnaud Mehl and Livia Chițu, was published this month.
The economists used new evidence of central bank reserves from the 1910s to early 1970s, mainly focusing on the interwar period of the 1920s and 1930s. They have challenged the traditional ‘winner-take-all’ view that there can only be one dominant reserve currency at a time.
“In the period between the wars, it seems the British pound and the US dollar shared reserve currency status more or less equally, depending on the year,” said Eichengreen and his colleagues. They found that “before the First World War, even though sterling was the most important currency, the French franc and German mark were internationally significant, too.”