"Whither the Key Currency? American Policy and the Global Role of the Dollar in the 21st Century"
What does the future hold for the US dollar? Will it remain the world's key currency? These questions have been asked at various moments since the early 1970s and, each time, predictions of the imminent demise of the US dollar's global position have proven premature. But the dollar's global position is being questioned again today with greater urgency for some very good reasons: the large US current account and fiscal deficits, the existence of the euro as a credible alternative key currency, and growing questions about the sustainability of the accumulation of enormous dollar reserve holdings in East Asia and elsewhere.
The dollar's future will be determined partly by the decisions of market actors and public authorities outside of the US. But US policy will also play a very significant role. This research project seeks to explore the relationship between US policy and dollar's evolving global role in the current context. How has recent US economic policy influenced the US dollar's status as key currency? What role does US domestic politics play in the management of the dollar? To what extent are US authorities concerned about the dollar's global role? Are geostrategic considerations about international monetary power significant in driving US policy? How would the US be affected by a world in which the dollar's global role was significantly diminished?These are the questions we hope this research project can address.
Benjamin J. Cohen has been a member of the Political Science Department since 1991. He was educated at Columbia University, earning a PhD in Economics in 1963. He has worked as a research economist at the Federal Reserve Bank of New York (1962-1964) and has taught at Princeton University (1964-1971) and the Fletcher School of Law and Diplomacy, Tufts University (1971-1991). A specialist in the political economy of international money and finance, he serves on the editorial boards of several leading academic journals and is the author of ten books, including most recently The Geography of Money (1998), The Future of Money (2004), and The Future of the Dollar (2005). He has won numerous awards and in 2000 was named Distinguished Scholar of the year by the International Political Economy Section of the International Studies Association.