OMFIF | Thu, Jul 1, 2021
by Mark Sobel
Debates about the dollar’s global financial status are back in vogue and with them the notion that the US has and abuses an ‘exorbitant privilege’. Europeans complain about the dollar leveraging US financial sanctions. The Economist has suggested that the Next Generation EU fund could help boost the euro into a dollar rival, but this is wishful thinking.
Some argue the digital renminbi is needed to reduce Chinese dependence on dollar hegemony. In contrast, Michael Pettis, professor of finance at Peking University, in recent tweets on China and renminbi internationalisation, reinforced his long held and thoughtful view that the dollar’s role is an ‘exorbitant burden’.