June 25, 2024 — A paper co-authored by Menzie Chinn, Hiro Ito, and me has just been published at the JIMF. It finds that US size, the ability of the dollar to hold its value, and inertia continue to support the dollar’s #1 status as an international reserve currency. And that the threat of sanctions against other countries has yet to impact aggregate global $ holdings by central banks. (Ungated WP version.)
Chinn, Frankel and Ito: “The Dollar versus the Euro as International Reserve Currencies”
March 26, 2023 — This month marks the 50th anniversary of the date, in March 1973, when the dollar, yen, deutschemark, pound, and other major currencies went untethered, their relative values to be determined thenceforth by foreign exchange markets rather than by governments. The abandonment of the Bretton Woods system of fixed exchange rates was generally viewed as a policy failure. The movement from fixed to flexible exchange rates, however, was better viewed as part of a natural long-term process.
September 24, 2022 — The dollar is sky-high. Since May 2021, it has risen 19 % against Europe’s euro, even reaching 1-to-1 parity in recent weeks. The dollar has appreciated 20 % against Britain’s pound. And it is up 28 % against Japan’s yen, provoking the Bank of Japan to sell dollars on September 22, essentially the first foreign exchange intervention by a G-7 country since 2011 and the first in the direction of supporting a currency’s value against the dollar since the euro in 2000.