The U.S. Dollar

Paper Summary:

This paper explains that, in macroeconomics terms, the U.S. dollar appears to be the currency holding the greatest global power because it is the dominant reserve currency, now comprising 68 percent of global reserves as compared with 51 percent of global currency reserves just a decade ago. The author points out that liberal U.S. foreign and domestic policies influenced the success of the American currency because the United States was able to maintain only the minimum of trade barriers with Western Europe, Japan and South Korea. The paper relates that some critics hail the decline of the dollar as a much-needed reestablishment of economic balance between the United States and the rest of the world; however, other critics see the decline of the dollar as a path towards local economic growth and prosperity within the United States' borders.

From the Paper:

"Historically, the extreme strength of the dollar was gained after World War II, when there was a decline in the value of the currency holding power until this event, the British pound sterling. At the verge of becoming a globally accepted standard currency, the Second World War decimated Britain in terms of power and economy, while the United States readily stepped in to fill the gap. The first major influencing factor on the dollar thus appears to be the decline of the then major currency in the world."

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