Planet Money Is the reign of the dollar over?
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May 9, 2025 
Eswar Prasad, a Cornell University professor and former IMF economist, discusses the potential decline of the U.S. dollar as the global reserve currency. He explains what makes a reserve currency and the historical significance of the dollar. The conversation explores the challenges posed by alternative currencies like the euro and Bitcoin, and examines the implications for global finance if the dollar loses its dominance. Prasad highlights the importance of liquidity and market stability in maintaining the dollar's stature.
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Ishwar's Dollar Taxi Experiment
- Ishwar Prasad successfully paid for cab rides in India, China, and Italy using U.S. dollars instead of local currency.
- This shows the global trust and convenience of the U.S. dollar in everyday transactions.
Criteria for Reserve Currency
- A reserve currency needs liquidity, safety, trust in institutions, and ideally a strong growing economy.
- The U.S. dollar has met these criteria, making it the preferred global reserve currency for decades.
Dollar Replaces Pound at Bretton Woods
- The British pound, dominant during the British Empire, lost reserve currency status after World War I.
- The 1944 Bretton Woods conference deliberately established the dollar as the world's reserve currency.
