The study of the problems due to having one dominant global currency and even the owners of the currency is supposed to benefit, namely the United States, felt the downside. Dangerous volatility that occurred in the world financial markets in the last 12 months, according rooted in fear of what happens when a world which has stockpiled large amounts of debt in the face of signs of interest rates will increase.Although it is often rumored that households and banks in the United States to pay back more debt than during the credit crisis eight years ago, but all of the reduction was offset by the debt of private, corporate, and government higher than other parts of the world, including from Europe, China and developing countries.The role of the US dollar as the main reserve currency of the world are denominated debt is largely emerges as a new complication that increases the risk of instability.US first interest rate hike in a decade last December that of only 0.25% would be enough to trigger turbulence in the world market and create global capital markets started the year with the worst since World War 2. The subsequent recovery could only occur after the Federal Reserve Rush stated that it was delaying further increases.
US
economic growth is approaching full employment can last possibility of
rising interest rates and the strengthening of the dollar, but the rest
of the world obviously can not. In turn, when the world went into shock due to the high cost to pay
back its debts in dollar, then it will become a boomerang for the United
States.By looking at this, it's no wonder that even though many people claim
that the US should be happy with the privileges he enjoyed thanks to the
status of dollar as the world's main reserve currency, but the US
central bank officials do not even like.In a ceremony in Zurich, Switzerland, on Tuesday, Dudley of the New
York Fed said that Americans should not feel bothered when other
currency replace the dollar as a reserve currency.Although it does not expressly want to throw grasped dollar hegemony,
but it is clear that there is ambivalence among central bank officials
on the status as the world's reserve currency, because of the extensive
use of their currencies in the international level could even jeopardize
domestic policy.The tension that is at risk of spreading instability. If the FED can not change the policy for fear the shock would cause a
boomerang impact, it would appear concern that low interest rate policy
instead FED will only make the world accumulate more debt and
imbalances.Similar
worries voiced by the head of Monetary and Economic Department of the
Bank of International Settlement (BIS), Claudio Borio. High-ranking officials in "his bank of central banks of the World" it
said that the loose monetary policy of the FED could spread to other
countries that are trying to increase their competitiveness amid
weakening dollar.In
the eyes of Morgan Stanley, the situation will only lead to more debt,
and there is no painless way out of the problems that will come into
effect in the next few years of this. Meanwhile,
the veteran from the US bank estimates that the dollar is likely to
strengthen again, because the US economy may be the only strong
competing in the exchange rate of its currency strengthen.
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