In Part II of MacroVoices’s holiday special - which is all about examining the dollar’s hegemony over the world’ financial system and analyzing different theories pertaining to how much longer the greenback will reign as the world’s reserve currency.
In the previous installment - one of five segments that we will be sharing this week - the discussion centered around the question of how much longer the dollar will hold its position as the world’s reserve currency.
While the petrodollar regime is largely responsible for justifying the dollar’s position as the world’s reserve currency, the eurodollar system is the mechanism by which the US has maintained its dominance over the world financial system. It stands to reason that, if foreign banks can’t offer dollar deposits to their business clients then those clients wouldn’t be able to support the dollar’s hegemony by using the greenback as one of the main currencies to settle trade.
Snider posits that the eurodollar system began to break down in 2007 as the housing crisis unfurled across the US. The crisis forced foreign companies and governments to confront the risks inherent in holding dollars and US government debt.
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