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MNI: Fed's Waller Sees Dollar Staying Dominant World Currency

Federal Reserve Governor Christopher Waller on Thursday said he doesn't see the U.S. dollar being dethroned anytime soon despite frequent questions about a decline, because it continues to dominate as a store of value, a medium of exchange and as a unit of account.

"I do not expect to see the U.S. dollar lose its status as the world’s reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance," said Waller, according to prepared remarks. "Recent developments that some have warned could threaten that status have, if anything, strengthened it, at least so far."

At almost 60% of global reserves in 2022 the U.S. dollar is by far the dominant reserve currency, Waller noted in his speech to a University of the Bahamas conference. The euro is next at 20% he said, still noting potential challenges to the dollar’s status including increased jointly backed EU debt. A shifting payments landscape including the rapid growth of digital currencies could reduce reliance on the U.S. dollar, Waller said. (See: MNI: EU Excessive Debt Procedures Under New Rules-Officials)

"The continued rapid growth of China and Chinese efforts to boost the use of their currency could make the Chinese renminbi a more attractive competitor to the dollar," he said. "Several factors currently weigh against the renminbi as an attractive asset for international investors: It is not freely exchangeable, the Chinese capital account is not open, and investor confidence in Chinese institutions is relatively low."

MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com
MNI Washington Bureau | +1 202-371-2121 | evan.ryser@marketnews.com

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