Wednesday, December 3, 2014

King Dollar is here to stay

China wants the yuan to be a global currency but not at the expense of tight government control. 

Earlier suggestions that the euro might rival the dollar have been replaced by worries over whether the Teutonic North and the Club Med South can remain under one currency. There is no common fiscal policy in the euro zone and none is likely, considering the region's vast cultural and economic differences. 

The Japanese government is taking small steps toward globalizing the yen, but fundamentally doesn't want the yen to be an international currency. 

The dollar has been the primary trading and reserve currency since World War II and is likely to remain so for decades. Rapid growth in the economy and per-capita output weigh in the dollar’s favor. American financial markets are broad, deep and transparent, as is the economy. Despite the dollar's decline since 1985, its credibility is substantial.  And there is no real substitute for the dollar as a global currency.