Does the US dollar confer an exorbitant privilege?

This paper questions the asserted pecuniary benefits conferred by the dollar's international role. If these benefits are smaller than often claimed, then the difficult measurement of costs can be finessed. The original privilege notion characterised the dollar's systemic role in official foreign exchange reserves before 1973. Five subsequently developed notions refer to the broader, more evolutionary role of the dollar in the international monetary system. (1) As international debtor, the US borrows in its own currency – but others do too. (2) Dollar bills held offshore confer a benefit – but it is neither large nor exclusive. (3) The US Treasury may borrow more cheaply owing to official holdings – but it shares this advantage through an integrated global bond market. (4) The US earns higher yields on its external assets than it pays on its external liabilities – but this undoubted advantage arises from direct investment, far from the dollar's international role. (5) US banks may play on a home court – but they have in fact won a modest share of offshore dollar business.