The prestigious economist explained that the dominance of the US currency in world trade and investment flows is overestimated
Paul Krugman, the Nobel Prize winner in economics, recently asserted that the dominance of the dollar in global trade and investment flows is overrated and worth no more to the United States than a mere “fraction of 1% of its GDP.”
In an opinion article published in The New York Times, the prestigious economist argued that the leadership of the American currency could be overshadowed by the arrival of other currencies such as the Chinese yuan.
However, he clarified that “a look at what such dominance actually entails makes it clear that the importance of controlling the world’s reserve currency is vastly overrated.”
He added: “The point is that pulling one or two threads of this web is not likely to cause it to come undone. Even if some governments express a desire for payments to be made in other currencies, it is not entirely clear that they can make that happen, since we are mainly talking about private sector decisions. And even if they can make partial de-dollarization stick, all the other advantages of the dollar as a banking and lending currency will remain.”