Can the U.S. Dollar Survive as a World Reserve Currency?

Abstract

Following World War II, the United States emerged as the world's single, dominant economic power. That role is diminishing, however, as European nations, Japan, and newly industrialized countries of the Pacific basin begin to exert more economic influence in the world marketplace. As we move to an age of more shared economic power, it seems unlikely the U.S. dollar will survive as the only world reserve currency. A natural extension of this pluralism would be the development of a single, international currency that would be freely accepted by all nations for the purposes of international transactions. An international institution would issue the currency and maintain the support and cooperation of member nations.