The Dollar's Global Dominance Is Over

Instead, what will ultimately replace today's dollar-centric international monetary and financial system is a tripolar system organized around the dollar, the euro and the Chinese renminbi. Despite all of the current wailing and gnashing of teeth in Europe about its future, the euro isn't going anywhere. And China, for its part, is working energetically to internationalize its currency — and it is making faster progress than most people appreciate. The world will be better off as a result. The existence of alternatives to the dollar will mean that the issuers of internationally used currencies will feel market discipline earlier and more consistently. When the U.S. again shows signs of falling prey to financial excess, it will not receive as much foreign funding as freely as it has in the past.