Jeffrey Frankel is James W. Harpel Professor of Capital Formation and Growth at Harvard. He was appointed to the Council of Economic Advisers by President Clinton in 1996, and subsequently confirmed by the Senate.
His recent blog post on Dollar share in FX reserves of Central Banks is worth a read.
I am including the graph he puts in his article in this note. The US dollar (and the country) achieved international hegemony post World war II. A strong economy made a strong country and dollar became the "reserve currency". The world has come a full cycle. Arguments about - TINA - there is no alternative, will eventually have to face up to reality. When an alternative becomes a desperate enough need, it emerges.
1 comment:
With India declaring purchase of $6.7 billion of Gold, the article is even more timely in Indian context. Gold has become a natural diversification agent for forex reserves and as a natural hedge against impending inflation problems in US.
Ashish
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