Why The U.S. Dollar’s Reserve Currency Status Is Safe
<p>The U.S.’ dollars (USD) reserve currency status seems as safe today as it’s ever been over the past decade or so — inflation is down, the U.S. economy is strong, and the most important reason: competitor currencies look less attractive by the day.</p>
<p>It’s great being the country that issues a reserve currency. It means that other countries, central banks, global companies, and investors use your currency to transact, raise capital, and save (as a store of value).</p>
<h2><a href="https://medium.com/alpha-beta-blog/the-u-s-cant-afford-to-lose-its-reserve-currency-status-b08009c2cbf2?source=post_page-----90c2912cdae7--------------------------------" rel="noopener follow" target="_blank">The U.S. Can’t Afford To Lose Its Reserve Currency Status</a></h2>
<h3><a href="https://medium.com/alpha-beta-blog/the-u-s-cant-afford-to-lose-its-reserve-currency-status-b08009c2cbf2?source=post_page-----90c2912cdae7--------------------------------" rel="noopener follow" target="_blank">The loss of its exorbitant privilege would be disastrous</a></h3>
<p><a href="https://medium.com/alpha-beta-blog/the-u-s-cant-afford-to-lose-its-reserve-currency-status-b08009c2cbf2?source=post_page-----90c2912cdae7--------------------------------" rel="noopener follow" target="_blank">medium.com</a></p>
<p>The net effect is that demand for USD and USD denominated assets are significantly boosted by reserve currency status — if the reserve currency is the world’s de facto store of value then sovereign bonds issued by the owner of that reserve currency become the world’s de facto risk free asset. This allows for a lot more dollars to be printed before being hit with significant inflation as well as a lot more USD debt (a.k.a. U.S. Treasuries) to be issued before being hit with higher yields. A major reason that our economy is still looking good after a decade plus of super easy monetary policy and significant money printing is precisely because of the U.S. dollar’s reserve currency status.</p>
<p>In 2021 and 2022 when inflation fears started hitting the U.S., everyone started wondering if reserve currency status was at risk. And if it was, then who would be next in line to inherit the all-important mantle? </p>
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