Re:U.S. Goods Trade Deficit Declines to Smallest in Three Years
by roenxi on Wednesday January 01, 2020 @01:50AM
(#21926982)
Strictly speaking there is no need to have any reserve currency. Trade between two countries can happen directly and prices can be denominated locally.
In a true crisis scenario international trade can fall back to a fixed standard (gold, crypto, whatever) for settling things.
In practice though I'd be surprised if all those countries were really unhappy with their currencies becoming the reserve. Being the reserve creates demand for paper which can be exchanged for real goods - a substantial win for the creators of the currency.
One of the big reasons to use the US dollar as the global reserve is the US government exerts itself to make that happen. If they stopped, others would cheerfully fill the gap. The real point of resistance is replacing the SWIFT system.
In a true crisis scenario international trade can fall back to a fixed standard (gold, crypto, whatever) for settling things.
In practice though I'd be surprised if all those countries were really unhappy with their currencies becoming the reserve. Being the reserve creates demand for paper which can be exchanged for real goods - a substantial win for the creators of the currency.
One of the big reasons to use the US dollar as the global reserve is the US government exerts itself to make that happen. If they stopped, others would cheerfully fill the gap. The real point of resistance is replacing the SWIFT system.