The Federal Reserve Bank of New York today released Is the International Role of the Dollar Changing?, the latest article in its series Current Issues in Economics and Finance.
In this issue, author Linda Goldberg examines the uses of the U.S. dollar across key areas of international trade and finance. The study provides evidence that the dollar has retained its status as the dominant international currency despite substantial movement in the value of the dollar, the advent of the euro and recent market turbulence.
Goldberg argues that a number of factors—including the dollar’s established role in international markets, the large size and relative stability of the U.S. economy, and the pricing of oil and other commodities in dollars—have perpetuated the currency’s role as the leading medium for international transactions.
The author notes, however, that changes to the size and structure of the global economy in the years ahead could reduce the use of the dollar. Goldberg suggests that it will be important for policymakers to monitor the currency’s international role and understand any related consequences.
Linda Goldberg is vice president in the International Research Function of the Federal Reserve Bank of New York.