If some stories are easier to tell than others, the decline of the U.S. dollar as a reserve currency is one of them. It’s not hard to see why. The cast of characters that avail themselves for the script includes international trade, financial architecture, great-power competition, cycles of history, and even parables from ancient Greece.
And on cue, the headlines are again churning out new versions of the familiar fable. New plot lines include the economic fallout of a global pandemic as well as a “capital war” between the United States and China, in which Washington usurps Beijing’s traditionally lonely role as the imposer of the restrictions on how capital can move between their two countries, frightening global investors, who then forsake the fallen dollar. Taken at face value, the headlines suggest that the dollar’s long-awaited dethroning may be here at last.
