Barry Eichengreen, Paul Blustein, and Brendan Greeley on Dollar Dominance

**David Beckworth** (0:02)
Welcome to Macro Musings, where each week we pull back the curtain and take a closer look at the most important macroeconomic issues of the past, present and future. I am your host, David Beckworth, a senior research fellow with the Mercatus Center at George Mason University. I'm glad you decided to join us.
Today's episode is a special roundtable discussion. One of the biggest questions in international finance. Why is the dollar still the world's dominant currency? And how long can that dominance last? To help us think through this question, I'm joined by three previous podcast guests and authors of recent books that approach the question of the dollar from very different but complimentary perspectives. Our first guest is Barry Eichengreen, who recently published his book titled Money Beyond Borders, Global Currencies from Creases to Crypto. Our second guest is Paul Blustein. His recent book is Keen Dollar, The Past and Future of the World's Dominant Currency. Our final and third guest is Brendan Greeley. His new book is The Almighty Dollar, 500 Years of the World's Most Powerful Money. Together, these authors and their books raise some fascinating questions. Is the dollar's dominance primarily about American power, financial markets, institutional trust, or network effects? Is dollar dominance an exorbitant privilege or burden? And are we witnessing the beginning of a new transition to a new currency order, or just another premature obituary for keen dollar? Barry, Paul, and Brendan, welcome back to the show.
Pleasure to be with you. Thank you.
It's great to have you on such an esteemed crew of scholars, and I've had the privilege to visit with you before. And listeners, if you have not already, go back and check out their shows. We've discussed their books. But it's great to bring you all together and to have this roundtable. We can draw upon each other's ideas. We can ask each other questions. And I want to begin first by giving you each a few minutes just to pitch your book, tell us what the book is about, and then we'll get into the broader discussion about the dollar.
And we'll start with Barry.

**Barry Eichengreen** (2:15)
Thank you, David. I'm happy to try the elevator pitch, although it's a crowded elevator today.
The premise of my book is that we can learn important things about the future prospects of the dollar from the very long sweep of monetary and financial history and effectively two plus millennia over which currencies have been used across borders for commercial and financial transactions. So that history elucidates the economic and financial prerequisites for international currency status that I think will be familiar to economists, that they tend to be the currencies of countries with considerable economic, commercial, financial prowess, they're big exporters and importers, big foreign investors and so forth, that possess stable currencies and liquid financial markets.
But I emphasize also that there are important political prerequisites for international currency status, internal and external. So internally, they tend to be the currencies of countries with a separation of powers, rule of law, control of corruption. You can guess where I'm going later in the conversation. They tend to be the currencies of countries that have well-established geopolitical alliances as well, where their alliance partners regard the issuing country as a reliable steward of their foreign reserves, where the alliance partners are more than willing to hold and use that currency as a show of good faith in their geopolitical partner. So again, you can anticipate what the subtext is when we return to the dollar's fate.

**David Beckworth** (4:20)
I love that, Barry. 2,500 years of monetary history. What an undertaking. All right, how about you, Paul?
Give us an elevator pitch for your book.

**Paul Blustein** (4:29)
Okay. Well, my personal favorite pitch for my book is to cite the dedication. The dedication is, to my grandchildren, whom I will always love unconditionally even if they grew up to like crypto. Okay, so more substantively, I think it's fair to say my book is pretty much on one end of the spectrum of the argument, the debate that's been underway for the past several months about whether the dollar's dominance is secure or not. Although I'm as appalled as I think anybody at the actions of the Trump administration has been taking, I believe quite strongly that the dollar will retain its dominant role for the foreseeable future by whatever definition you want to apply to the word foreseeable.
Let me emphasize, although I said I'm at one end of the spectrum, I think I'm in pretty good company. I think I'm well aligned with Paul Krugman, with Ishwar Prasad of Brookings, and with you, David. I recall you writing something quite similar on the subject. But my central overarching theme of the book is that although I'm confident that the dollar will remain dominant for the foreseeable future, I do not think that this means that the United States should be complacent about being the issue of the world's dominant currency. Far from it. I hope this doesn't sound juvenile to listeners, but I argue that the Spider-Man principle ought to apply to the dollar, that with great power comes great responsibility. The dollar's dominance confers great power on the United States. I think the main power is to use the dollar as a weapon for foreign policy purposes. But that power should come with commensurate responsibility. I go into a number of ways in which I believe that to be true in the book. In the interest of time, I'll just focus on one. The most obvious one is it's used as a sanctions weapon. When we impose dollar sanctions on an adversary country, people's livelihoods can be really seriously adversely affected and there can be blowback because countries can use some kind of economic weapon against us. They can retaliate even if they can't use their currencies like the way we can against them. My book has a lot of history in it. It's not primarily a work of history, but I was a journalist covering some of the big events in the book. Not to date myself too much, but that includes the war on inflation launched by Paul Volcker when he was Fed Chairman back in the late 1970s and early 80s. I like to think that my experience as a journalist helped bring some of these things to life. The majority of chapters of the book deal with more recent events and deal with two really important new developments concerning the dollar, its use as a geopolitical weapon, and how all that works.