56 – Ethan Ilzetzki on the U.S. Dollar as an Anchor Currency
Macro Musings with David Beckworth
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The Role of Anchor Currencies in Global Economies
This chapter delves into the significance of anchor currencies like the US Dollar in the global economy and discusses how countries navigate the dilemma of balancing capital mobility, fixed exchange rates, and independent monetary policy. It explores the historical transition of the US Dollar to become the dominant reserve currency, surpassing others like the pound and the euro, and discusses theoretical arguments around the emergence of a single dominant currency due to network effects.
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