Jerome Powell, the Federal Reserve Chairman, has shed light on the looming danger of de-dollarization and the potential risks associated with the U.S. dollar losing its global reserve currency status. Powell attributes the predominance of the USD to the overall economic superiority of America.
Addressing De-Dollarization Concerns, Potential Dethroning of USD as Global Reserve Currency: Insights from Fed Chairman Powell
The Fed Chairman Jerome Powell addressed the rising anxieties surrounding de-dollarization during his recent testimony before the House Financial Services Committee.
In response to Congressman Ritchie Torres’s (D-NY) question regarding how the threat of de-dollarization by foreign adversaries, specifically the CCP, should be perceived, Powell asserted that the US dollar’s status as the world’s reserve currency is “a very important thing to us.”
Powell continued to explain that the dollar’s status is primarily due to the U.S.’s robust democratic institutions, rule of law, and its historical record of stable pricing levels.
He suggested that “as long as these things are in place,” he believes that the dollar will continue to maintain its status as the reserve currency.
On being asked whether the U.S. dollar’s global reserve currency status is a result or a reason for America’s economic dominance, Powell responded with:
In my perspective, it’s more a result.
“Additionally, a balance often emerges where one currency is universally accepted as the standard, and for quite some time, the dollar has filled this role, and I anticipate it will continue to do so,” further clarified Powell.
However, not everyone agreed with Powell’s assessment. Economist Peter Schiff argued via a tweet, “Powell is mistaken. The dollar’s reserve currency status was initially a result of America’s economic dominance, but it has evolved into the primary support maintaining that dominance. If the dollar loses its reserve status, U.S. economic dominance will collapse.”
Simultaneously, a rising number of nations globally are intensifying their efforts towards de-dollarization, inclusive of members from the BRICS economic bloc and the Association of Southeast Asian Nations (ASEAN). Furthermore, the BRICS is contemplating a proposal for a common currency to be discussed in their upcoming leaders’ summit.
What are your thoughts on the comments made by Fed Chair Jerome Powell concerning de-dollarization and the status of the U.S. dollar as a reserve currency? Share your views in the comments section below.
Frequently Asked Questions (FAQs) about De-dollarization
What was the main topic of Federal Reserve Chairman Jerome Powell’s discussion?
Jerome Powell addressed the potential threat of de-dollarization and the risks associated with the U.S. dollar losing its status as the world’s reserve currency.
What is the view of Jerome Powell on the U.S. dollar’s status as the world’s reserve currency?
Powell believes the U.S. dollar’s status as the world’s reserve currency is largely due to the U.S.’s robust democratic institutions, rule of law, and its historical record of stable pricing levels. He expects that as long as these factors are in place, the dollar will continue to maintain its reserve currency status.
What was Congressman Ritchie Torres’s question to Powell?
Congressman Ritchie Torres asked Powell about how seriously the threat of de-dollarization, especially by the CCP, should be taken.
What is economist Peter Schiff’s counterargument to Powell’s stance?
Economist Peter Schiff disagrees with Powell, arguing that the dollar’s reserve currency status, which initially resulted from America’s economic dominance, has since become the primary support for that dominance. He believes that if the dollar loses its reserve status, U.S. economic dominance will collapse.
Which countries are increasing their efforts towards de-dollarization?
A growing number of countries, including members of the BRICS economic bloc and the Association of Southeast Asian Nations (ASEAN), are ramping up their de-dollarization efforts.
The BRICS economic bloc is considering a proposal for a common currency, which is expected to be discussed at their upcoming leaders’ summit.
More about De-dollarization
- Federal Reserve
- House Financial Services Committee
- De-dollarization Efforts
- BRICS economic bloc
- Association of Southeast Asian Nations (ASEAN)