What does Prime Minister Mark Carney have against the U.S. dollar?
Plenty, it turns out. And his recent calls for an alternative to the U.S. greenback as a global reserve currency will not go over well in Washington, where the dollar’s dominance is seen as an indispensable tool in the conduct of U.S. economic and foreign policy.
The U.S. dollar accounts for about 57 per cent of foreign exchange reserves held by the world’s central banks. While the proportion is down from about 70 per cent in 2000, it far outweighs the U.S. share of the global economy (about 26 per cent) and global trade (12 per cent). Most international trade between non-U.S. countries is conducted in dollars.
The dollar’s pre-eminence stems from the sophistication, liquidity and depth of U.S financial markets, and the perception that U.S. Treasury bonds remain the world’s safest asset. The latter assumption is…
