Feb 15 (Reuters) – Federal Reserve Governor Christopher Waller on Thursday laid out the case for the world’s continued reliance on the U.S. dollar and the currency’s dominance in international trade, a key advantage for the U.S. economy on the global stage.
“Recent commentary warning of a possible decline in the status of the U.S. dollar raises concerns about the effects of sanctions against Russia, U.S. political dysfunction, the rise of digital assets, and China’s efforts to bolster usage of the renminbi,” Waller said in remarks prepared for delivery to a conference sponsored by the Global Interdependence Center and the University of the Bahamas in Nassau.
But none of those concerns has translated to a notable decline in the dollar’s “outsized” role in the world economy, he said. Indeed, increased use of digital assets like stablecoins, which are overwhelmingly tied to the dollar, tends to increase the U.S. currency’s international profile, Waller noted.
U.S. adversaries have few alternatives to the dollar, with international investors shy about using China’s currency, for instance, for a range of reasons including lack of confidence in Chinese institutions.
And in times of international stress, investors flock to U.S. Treasuries as a way to stabilize the value of their assets.
“I do not expect to see the U.S. dollar lose its status as the world’s reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance,” Waller said. “Recent developments that some have warned could threaten that status have, if anything, strengthened it, at least so far.”
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Reporting by Ann Saphir; Editing by Paul Simao
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