Chapter

Introduction

Ronald I. McKinnon

in The Unloved Dollar Standard

Published in print December 2012 | ISBN: 9780199937004
Published online January 2013 | e-ISBN: 9780199980703 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199937004.003.0001
Introduction

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Since 1945, the dollar has been the key currency for clearing international payments among banks including interventions by governments to set exchange rates, the dominant currency for invoicing trade in primary commodities, and the principal currency in official exchange reserves. But nobody loves it. Foreigners consider the international use of the dollar to be an exorbitant privilege of the United States, while Americans resent the fact that they cannot determine their own exchange rate. Yet the dollar remains the indispensible basis of international exchange and the fearsome 800-pound gorilla of international finance.

Keywords: dollar standard; international money; natural monopoly; first-mover advantage; network effects; Japan bashing; China bashing; three macro fallacies

Chapter.  3485 words. 

Subjects: Financial Markets

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