DE DOLLARIZATION: A SERIOUS THREAT
A nother round of bank bailouts following the collapse of Sili- con Valley Bank and Signature Bank earlier this year have once again stoked fears of a broader banking crisis and economic recession. But even as financial experts warn about the moral hazard and uncertainty fostered by bailouts, the US economy may be facing an even more potent threat de-dollarization. In recent months, a growing number of nations have announced that they are moving away from the US dollar as their currency of exchange. This seismic development in the finan- cial world has threatened to upend 80 years of precedence in which the vast majority of global trade has been conducted via the US dollar, making the currency the monetary king of the world’s most important financial markets.
This system was established in 1944 at the Bret- ton Woods Conference, where the leaders of 44 nations met and decided to peg nearly all global currencies to the US dollar, which was in turn pegged to gold. While the US was already the stron- gest economy in the world by the
time of the Bretton Woods Confer- ence, this new system catapulted the United States even further ahead, solidifying the dollar as the world’s de facto reserve currency.
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34 • AMAC Magazine
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