Dr. Hans Genberg, Executive Director of The SEACEN Centre shares his review of How Global Currencies Work, Past, Present, and Future
Barry Eichengreen, Arnaud Mehl, and Livia Chiţu.
The globalization of currencies is a topic that captivates economists, politicians, and laymen alike as it evokes notions of hegemonic power, exorbitant privileges, and races to become the dominant currency in the world. (When) Will the Chinese Renminbi overtake the United States dollar as the dominant international currency is a question that attracts much attention, just as the possibility of the Euro or the Japanese Yen challenging the Dollar once did.
Economists are drawn to the subject in part because it is believed that issuing the dominant international currency brings economic advantages for the issuing country inter alia in the form of lower borrowing costs in international markets and seignorage gains associated with use of the physical currency by non-nationals. Speaking of the United States dollar, the former French Minister of Finance, Mr. Valéry Giscard d'Estaing coined the term exorbitant privilege to refer to such advantages.
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