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Pierre-Olivier Gourinchas on Geopolitics and Dollar Dominance

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Pierre-Olivier Gourinchas on Geopolitics and Dollar Dominance

IMF,

5 min read
3 take-aways
Audio & text

What's inside?

The US dollar could be on the decline as the world’s reserve currency.

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Editorial Rating

7

Qualities

  • Eye Opening
  • Background
  • For Experts

Recommendation

The US dollar – long a safe haven and an anchor of international stability – could be on the decline as the world’s reserve currency, says economist Pierre-Olivier Gourinchas in this enlightening podcast conversation with the IMF’s Bruce Edwards. Economic sanctions arising from the war in Ukraine highlight the global trade system’s reliance on the US dollar, a reliance many countries want to curtail. And as global tensions push economies into separate camps, a fragmented world threatens the collaboration needed to address pressing global issues, as well as the IMF’s role as a financial stabilizer. Executives and students  of geopolitics will find important food for thought here.

Summary

The US dollar is the foundation of the international monetary system, which has governed global geopolitics for decades. 

The US dollar’s status as a global reserve currency has enabled the United States to run large annual trade deficits without amassing external debt. In the 20th century, major nations forged an alliance of trust, expressed in close trade and political ties, which became the basis for globalization. Emerging economies grew by entering an integrated world economy with a common currency.

Yet the war in Ukraine and its resulting sanctions have added to the possibility of alternative trade blocs and currencies. The knock-on effects of the conflict have appeared in neighboring countries that are shouldering the economic onus of refugee resettlement...

About the Podcast

Pierre-Olivier Gourinchas is chief economist at the IMF and the director of its research department. Bruce Edwards hosts IMF Podcasts.

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