It will require a very credible challenger to displace dollar’s dominance: IMF chief economist Gita Gopinath – The Economic Times

She said euro has been around for a long time but it has not reached the level yet that it was initially expected to achieve, while China has also been trying to internationalise its currency for long without much success. Speaking here at a WEF 2020 session on dollar’s dominance, Gopinath said historically one currency has always dominated the global trade.

Agencies


According to her, dollar has dominance because it provides the promise of stability.
It will require a very credible challenger and a strong institution to end US dollarNSE 5.44 %‘s dominance because the currency has proved to be very stable time and again, IMF chief economist Gita Gopinath said on Thursday.

She said euro has been around for a long time but it has not reached the level yet that it was initially expected to achieve, while China has also been trying to internationalise its currency for long without much success.

Speaking here at a WEF 2020 session on dollar’s dominance, Gopinath said historically one currency has always dominated the global trade.

It used to be British Pound once and now it is dollar. And if you look at reserves, again dollar dominates it followed by euro and all these factors have implications like monetary policy transmissions from the US to rest of the world, among others, she said.

According to her, dollar has dominance because it provides the promise of stability.

“We saw that soon after Lehman crisis that originated in US itself, dollar gained value. So it makes sense to hold money in dollar,” she said.

“If you want to be a credible challenger to dollar, that requires building a very strong institution,” she said.

Asked whether sanctions imposed by the US on countries leading to their trade shifting to euro and other currencies were having any impact, she said it was still very ‘tiny’.

via It will require a very credible challenger to displace dollar’s dominance: IMF chief economist Gita Gopinath – The Economic Times

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s