The reason the dollar was chosen as a Reserve Currency back in 1944 is because it was strong and backed by gold!
That all changed on August 15, 1971, when then President Richard Nixon advised Treasury Secretary Connally to suspend the convertibility of the dollar to gold thereby ending the Gold Standard.
Since the 1944 Bretton Woods Agreement, the U.S. Dollar has been at the center of international monetary policy and trade, but its strength has been declining since August 15, 1971.
Over the years countries like Russia and China have wanted to end the dollars grip and have created organizations like B.R.I.C.S. (Brazil, Russia, India, China, and South Africa) to get away from using the dollar as a unit of trade between countries who are members of B.R.I.C.S.
B.R.I.C.S. countries also came together to form the Asia Infrastructure Investment Bank (AIIB) to provide B.R.I.C.S. countries an alternative to the U.S. dominated International Monetary Fund (IMF) when in came to international loans.
On November 30, 2015, the Chinese Yuan (Renminbi) was put on equal footing as the U.S. Dollar, the Japanese Yen, the Euro, and the British Pound when the IMF added the Yuan to its basket of currencies known as SDR (Special Drawing Rights).
The over printing of the U.S. Dollar since 1971 and especially since the 2008 U.S. Housing Market collapse has further weakened the dollar and put its position as The World Reserve Currency in jeopardy.
With the advancement of Cryptocurrencies and stable coins along with the talk of Central Bank Digital Currencies, the dollars reign as the top Reserve Currency is even more questionable.
Could a suggestion by Randal Quarles, the Federal Reserve’s vice chair for Supervision save the dollar or even extend its reach on international monetary policy.
Read the article below that was written by Michael J. Casey, the Chief Content Officer at CoinDesk to find out and subscribe to my blog so that you can be notified when new content is added.
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Money Reimagined: United States of Stablecoin
To maintain the dollar’s position in the world, the U.S. should follow Randal Quarles’ advice and foster an open, stablecoin-driven money system.
Jul 2, 2021 at 1:45 p.m. EDT