Dollar hegemony

This article describes the ideas of Henry C.K. Liu. For the topic of Jean Gabriel's book The Dollar Hegemony: Dollar, Dollarization, and Progress (2000), see dollarization.

Dollar hegemony is the hypothesized monetary hegemony of the US dollar in the global economy. Henry C.K. Liu popularized the term in a widely circulated and quoted[citation needed] article "Dollar Hegemony has to go" in Asia Times, April 11, 2002. The article was quoted by William Clark[1] in January 2003, Immanuel Wallerstein of the Fernand Braudel Center on June 1, 2003,[2] Greg Moses,[3] James Robertson in April 2004[4] and subsequently by many others.

Contents

Definition

The term describes a geopolitical phenomenon of the 1990s in which the U.S. dollar, a fiat currency, became the primary reserve currency internationally. Three developments allowed dollar hegemony to emerge over a span of two decades.

  • The Bretton Woods system established in 1945 a fixed exchange rate regime based on a gold-backed dollar. The US did not view cross-border flow of funds necessary or desirable for promoting trade or economic development. In response to the accrual of negative consequences from the Triffin dilemma, President Richard Nixon abandoned the Bretton Woods regime in 1971 and suspended the dollar's peg to gold as U.S. fiscal deficits from overseas spending caused a massive drain in U.S. gold holdings.
  • The second development was the denomination of oil in dollars after the 1973 Middle East oil crisis; see petrodollars.
  • The third development was the emergence of deregulated global financial markets after the Cold War that made cross-border flow of funds routine.

A general relaxation of capital and foreign exchange control in the context of free-floating exchange rates made speculative attacks on the exchange rates of currencies a regular occurrence. These three developments permitted the emergence of dollar hegemony in the 1990s. At the end of the 20th century it was for the most part undisputed that the US dollar is the most important reserve currency in the world. As of 2007, it still has the largest share (65.7%) of foreign reserve holdings, with the euro some distance behind at 25.2%.[5] However since 2000, the dollar share is falling and the euro share is rising, though the trend is very gentle.

See also

Related concepts

References

External links


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Monetary hegemony — is an economic and political phenomenon in which a single state has decisive influence over the functions of the international monetary system. The functions influenced by a monetary hegemon are: accessibility to international credits, foreign… …   Wikipedia

  • Petrodollar warfare — The phrase petrodollar warfare refers to a hypothesis that a hidden, driving force of United States foreign policy over recent decades has been the status of the United States dollar as the world s dominant reserve currency and as the currency in …   Wikipedia

  • World currency — In the foreign exchange market and international finance, a world currency or global currency refers to a currency in which the vast majority of international transactions take place and which serves as the world s primary reserve currency.A… …   Wikipedia

  • Currency war — Brazilian Finance Minister Guido Mantega, who made headlines when he raised the alarm about a Currency War in September 2010. In July 20 …   Wikipedia

  • Michael Hudson (economist) — Michael Hudson Post Keynesian economics Born 1939 (age 71–72) Chicago, Illinois, USA Institution University of Missouri Kansas City Field Economics, Finance …   Wikipedia

  • Anti-globalization movement — Anti consumerism Ideas and theory Spectacle · Culture jamming · Corporate crime · Media bias · Buy Nothing Day · Alternative culture · Simple living · …   Wikipedia

  • Economic democracy — is a socioeconomic philosophy that suggests a shift in decision making power from a small minority of corporate shareholders to a larger majority of public stakeholders. There is no single definition or approach for economic democracy, but most… …   Wikipedia

  • Guerre economique par petrodollars — Guerre économique par pétrodollars L expression Guerre économique par pétrodollar se réfère à une hypothèse selon laquelle un dessein occulte guidant la politique étrangère des États Unis ces dernières décennies a été de conférer au dollar le… …   Wikipédia en Français

  • Guerre économique par pétrodollars — L expression Guerre économique par pétrodollar se réfère à une hypothèse selon laquelle un dessein occulte guidant la politique étrangère des États Unis ces dernières décennies a été de conférer au dollar le statut dominant de monnaie de réserve… …   Wikipédia en Français

  • Nixon Shock — The Nixon Shock was a series of economic measures taken by U.S. President Richard Nixon in 1971 including unilaterally cancelling the direct convertibility of the United States dollar to gold that essentially ended the existing Bretton Woods… …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.