The euro’s big chance

Prospect Magazine

The euro’s big chance

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The dollar’s reign as the world’s undisputed reserve currency could be drawing to a close

“The convention whereby the dollar is given a transcendent value as an international currency no longer rests on its initial base… The fact that many states accept dollars in order to make up for the deficits of the American balance of payments has enabled the US to be indebted to foreign countries free of charge. Indeed, what they owe those countries, they pay in dollars that they themselves issue as they wish… This unilateral facility attributed to America has helped spread the idea that the dollar is an impartial, international means of exchange, whereas it is a means of credit appropriated to one state.”

Thus spoke Charles De Gaulle in 1965, from a press conference often cited by historians as the beginning of the end of postwar international monetary stability. De Gaulle’s argument was that the US was deriving unfair advantages from being the principal international reserve currency. To be

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Niall Ferguson

Niall Ferguson’s latest book “Civilisation: The West and the Rest” is published by Allen Lane 

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