Steven Kamin and Mark Sobel on the Current State of 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.
Our guests today are Steven Kamin and Mark Sobel. Steven is a Senior Fellow at the American Enterprise Institute, and previously was the Director of the Division of International Finance at the Federal Reserve Board.
Mark is the US. Chairman at the Official Monetary and Financial Institutions Forum. Previously, he served as the US. Department of the Treasury for nearly four decades, including as Deputy Assistant Secretary for International Monetary and Financial Policy from 2000 to early 2015 From 2015 through 2018, he was the US. Representative at the IMF. Steven and Mark join us today to discuss whether dollar dominance is here to stay.
Steven and Mark, welcome to the show.

**Steven Kamin** (1:08)
Thank you. It's good to be here, Dan.

**Mark Sobel** (1:10)
Thanks. Looking forward to it.

**David Beckworth** (1:12)
Well, it's great to have you back, Steve. You were on last year. We had a fun conversation. Some of the topics we'll revisit today.
I encourage listeners to go back and check out that podcast. But Mark, this is your first time here.
We have been together before. We were at a Cato conference. We're on a panel together discussing fiscal dominance. But more importantly, Mark, you were one of the bosses or upper management when I was at US Treasury International Affairs. I was just a young person out of grad school. You were a Deputy Assistant Secretary, I believe, at the time. I believe also at some point you served as the Acting Assistant Secretary in International Affairs. So you had quite a great career at Treasury. Tell us a bit about that career.

**Mark Sobel** (1:59)
Well, I did a lot of acting as you said. Yes, I had the great honor of heading up the International Monetary and Financial Policy section. It's a great place to work, work with colleagues at the Fed, work with colleagues internationally, and be at the forefront of key issues that are always hitting the international financial system and working with the IMF and the G7, the G20, the Financial Stability Board to try and make the system work better.
Hopefully, I did a few things right in my time. In any case, let's get on with the dollar, which is really key to the International Monetary system, which is what I was doing at the time.

**David Beckworth** (2:41)
Well, before we move to the dollar, one last question about your career there. So you oversaw the Exchange Stabilization Fund, is that correct in your role?

**Mark Sobel** (2:48)
Yes.

**David Beckworth** (2:48)
So you were the person who sat in front of the figurative red button you'd press if it was ever needed. What was it like managing that?

**Mark Sobel** (2:56)
I didn't do much pressing. Obviously, the US doesn't intervene in foreign exchange markets. One still had to manage the meager foreign exchange holdings of the US, SDR transactions with other countries when they wanted to. We kind of got out of the credit stabilization business.
There was Mexico in the mid-90s, there was Uruguay subsequently in the early 2000s, but it became difficult to do such operations and they were much less needed in any case. I spent a lot of time worrying about foreign exchange policy, worked on the foreign exchange report, but managing the ESF was a nitty-gritty fun thing to do, but I really didn't knock that red button very often.

**David Beckworth** (3:39)
Okay, now you guys must have crossed paths in your two careers, right?

**Steven Kamin** (3:43)
Oh, absolutely. We, you know, aside from working on many issues together over the years, we would end up seeing each other and hanging out at many G20 meetings, IMF annual meetings all over the world.

**Mark Sobel** (3:56)
And I have to jump in there just to say it was a pleasure always working with the Fed. A lot of central banks and treasuries don't necessarily have close relations. We had a seamless relation on the international side. We shared briefing books and formulated positions for G20, G7 meetings.
So yes, Steve and I go way, way back. In fact, I think I met you when you were a volunteer for a year at CEA. And we were working on Russian reform for all the good our efforts did us.

**Steven Kamin** (4:25)
Good memory.
That's true. But I didn't remember the details.

**David Beckworth** (4:29)
Well, on the previous show with you, Steve, we talked about your visit at the CEA. So I encourage listeners to go back and check that out, which is great to have both of you here. You're both experts in this area of dollar and the world economy. And so you have a paper on dollar dominance.