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The Dollar Hegemon? Evidence and Implications for Policymakers

In: THE ASIAN MONETARY POLICY FORUM Insights for Central Banking

Author

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  • Pierre-Olivier Gourinchas

Abstract

This paper reviews the central role of the U.S. dollar in the global trade, financial and monetary systems. The dominance of the U.S. dollar as an invoicing, issuance, anchor and reserve currency has increased over time, especially so and somewhat paradoxically since the end of the Bretton Woods system. The dollar is now the ‘hegemon’ currency. I propose an explanation based on the growing complementarities between the role of the dollar for international trade and for international financial transactions. I also discuss the implications for policymakers of living in a ‘dollar world.’ The paper concludes with a discussion of some possible challenges to the dollar’s hegemony.

Suggested Citation

  • Pierre-Olivier Gourinchas, 2021. "The Dollar Hegemon? Evidence and Implications for Policymakers," World Scientific Book Chapters, in: Steven J Davis & Edward S Robinson & Bernard Yeung (ed.), THE ASIAN MONETARY POLICY FORUM Insights for Central Banking, chapter 7, pages 264-300, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811238628_0007
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    Citations

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    Cited by:

    1. Luca Fantacci & Lucio Gobbi & Dario Luciani, 2022. "Bene pubblico globale o arma finanziaria? L'egemonia del dollaro alla prova delle sanzioni (Global public good or financial weapon? Dollar hegemony to the test of sanctions)," Moneta e Credito, Economia civile, vol. 75(298), pages 123-147.
    2. Nicolas Groshenny & Naveed Javed, 2023. "Dornbusch’s overshooting and the systematic component of monetary policy in SOE-SVARs," TEPP Working Paper 2023-08, TEPP.
    3. Arslanalp, Serkan & Eichengreen, Barry & Simpson-Bell, Chima, 2022. "The stealth erosion of dollar dominance and the rise of nontraditional reserve currencies," Journal of International Economics, Elsevier, vol. 138(C).
    4. Anna Burova & Konstantin Egorov & Dmitry Mukhin, 2022. "Foreign Currency Debt and Exchange Rate Pass-Through," Bank of Russia Working Paper Series wps93, Bank of Russia.
    5. Mukhin, Dmitry, 2022. "An equilibrium model of the international price system," LSE Research Online Documents on Economics 112500, London School of Economics and Political Science, LSE Library.
    6. Roger Vicquéry, 2022. "The Rise and Fall of Global Currencies over Two Centuries," Working papers 882, Banque de France.

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