Dollar as World Reserve Currency!

David R. Kotok
Sun Aug 29, 2021

At Leen’s Lodge this year, Camp Kotok participants engaged in an extensive discussion of the dollar and its status as the world’s reserve currency, the historical structure, present-day problems, competing currencies (including central bank digital currencies and crypto), central banks, and all of the other interconnected issues that go with that monumental worldwide financial and geopolitical issue. The discussion took place for two weeks in bits and pieces, and the YouTube linked below is the publicly agreed upon panel discussion, which we’re making available to everybody. It is an invaluable 34-minute listen. Panel members are Barry Ritholtz, chairman and CIO at Ritholtz Management, who serves as moderator; Constance Hunter, principal and chief economist at KPMG; and Leland Miller, CEO at China Beige Book International. See “Camp Kotok 2021 Panel Discussion: Is the US dollar’s world reserve currency status threatened,”



After watching, we encourage readers to complete the full picture, exploring relevant history, current dynamics, and future macroeconomic possibilities in a changing global geopolitical scene. Here’s a recommended reading list:

(1) In an August 16 Money and Banking piece, Steve Cecchetti of Brandeis and Kermit Schoenholtz of NYU examine the distinctions between the historical focus of the ECB and the historical focus of the Fed, a measure of convergence in their policies and practices in recent times, and the ECB’s revised strategy going forward. See “The ECB's New Strategy: Codifying Existing Practice . . . plus,”

(2) David Zhang’s August 18 macro piece for the South China Morning Post, “As interest rates rise, G10 currencies could soon offer investors some fast and furious action,” examines central bank policies around the globe and opportunities for carry trades.  Zhang is a senior economist at Bank of China (HK) Financial Research Institute. Readers should remember that the SCMP, now owned by the Alibaba Group, now falls under the supervision and regulation imposed by a government of 1.4 billion people in the second-largest economy in the world, and what is published reflects views that Beijing wants English-language readers to see. In that context, this piece is a valuable read:

 (3) Mike Konzal’s August 16 post at the Roosevelt Institute, “Priorities for the Next Federal Reserve Chair: Completing the Revolution in Macroeconomic Policy,” discusses the best way to understand the construction of the new Federal Reserve policy that has been at work under Jerome Powell, suggesting that “four core shifts in thinking” reflected in Fed policy should provide guidance going forward. Here’s the link:

(4) In a New York Fed piece, “How the Fed Managed the Treasury Yield Curve in the 1940s,” Kenneth Garbade describes Fed policy and its objectives during a time that preceded the 50-years-ago Bretton Woods/Nixon action to close the gold window. Readers can compare and see the evolution of the Fed, which COVID has perhaps accelerated.

(5) In the podcast “Will COVID-19 mark the end of the old international order?” David Dollar, the host of the Brookings trade podcast Dollar and Sense, interviews Thomas Wright, coauthor of the new book Aftershocks: Pandemic Politics and the End of the Old International Order. Historically, pandemics have always shaken up and changed the geopolitical order of the time, and COVID-19 is no exception. Tom Wright summarizes the question he and coauthor Colin Kahl have attempted to answer: “So all around the world, politics have become more nationalistic and less cooperative. What we wanted to try to do was to document this period and say what worked, what didn’t, how bad was this, and how does the world respond when basically there’s no one at home to guide the ship?” Wright looks to the future, too, and to how the world might be better prepared for the next pandemic disruption:

David R. Kotok
Chairman of the Board & Chief Investment Officer
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