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The Dollar and Its Discontents


  • Olivier Jeanne

    () (Peterson Institute for International Economics)


Has the US dollar delivered the benefit that the rest of the world is expecting from its holdings of international liquidity? US government debt has been liquid and safe, and it is supplied in sufficient quantity. But it has given a low return to the countries that accumulated the most reserves, especially when those returns are measured in terms of the countries' own consumption. Jeanne argues that countries that accumulate the most reserves should expect a low return in terms of their own consumption and that international monetary reform can do little to change that fact.

Suggested Citation

  • Olivier Jeanne, 2012. "The Dollar and Its Discontents," Working Paper Series WP12-10, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp12-10

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    References listed on IDEAS

    1. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2004. "The revived Bretton Woods system," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 307-313.
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    12. Olivier Jeanne & Romain Rancière, 2011. "The Optimal Level of International Reserves For Emerging Market Countries: A New Formula and Some Applications," Economic Journal, Royal Economic Society, vol. 121(555), pages 905-930, September.
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    15. Pierre-Olivier Gourinchas & Hélène Rey, 2007. "From World Banker to World Venture Capitalist: U.S. External Adjustment and the Exorbitant Privilege," NBER Chapters,in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 11-66 National Bureau of Economic Research, Inc.
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    Cited by:

    1. repec:kap:atlecj:v:45:y:2017:i:4:d:10.1007_s11293-017-9558-2 is not listed on IDEAS
    2. Michael Bordo & Robert N McCauley, 2017. "Triffin: dilemma or myth?," BIS Working Papers 684, Bank for International Settlements.
    3. Michael D. Bordo & Robert N. McCauley, 2016. "The Current Account Version of the Triffin Dilemma," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 44(2), pages 171-182, June.
    4. Aizenman, Joshua & Dekle, Robert & Lothian, James R., 2012. "Overview of the special issue on “Policy Implications of and Lessons from the Global Financial Crisis”," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 1971-1975.
    5. Aizenman, Joshua, 2015. "The internationalization of the RMB, capital market openness, and financial reforms in China," BOFIT Discussion Papers 4/2015, Bank of Finland, Institute for Economies in Transition.
    6. McCauley, Robert N., 2015. "Does the US dollar confer an exorbitant privilege?," Journal of International Money and Finance, Elsevier, vol. 57(C), pages 1-14.

    More about this item


    International monetary system; Dollar; Foreign exchange reserves; Triffin dilemma;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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