Greenback back

The Return of the Almighty Dollar

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Power to her elbow.
  • Why it matters

    Why it matters

    The U.S. dollar has been written off before, and yet it retains its place as the world’s reserve currency. Economists and business leaders on both sides of the Atlantic recognize the pros and cons of a strengthening dollar, but some see it as a dangerous development if happens too quickly.

  • Facts

    Facts

    • Goldman Sachs predicts the dollar reaching parity with the euro by late 2017.
    • The dollar is used in 87 percent of all currency transactions worldwide.
    • According to an OECD model, several currencies are still highly overvalued against the dollar, including the Swiss franc and the British pound.
  • Audio

    Audio

  • Pdf

On Monday, U.S. Treasury Secretary Jack Lew hosted a meeting in the offices of the American Federal Deposit Insurance Corporation, FDIC. The attendees, Federal Reserve Chair Janet Yellen, British Chancellor of the Exchequer George Osborne and Mark Carney, governor of the Bank of England, came together to protect an imaginary world from ruin with their heroic actions.

The distinguished quartet went to the FDIC to run through a simulated emergency scenario: the failure of a bank that cannot be allowed to fail. The exercise was intended to shed light on whether the world can cope with a second Lehman shock.

The world’s most powerful leaders haven’t forgotten that horrific experience. The global economic system suffered permanent damage as a result of its near collapse. The economic recovery has remained stuck in a “new mediocre,” as the International Monetary Fund puts it.

The world economy is losing steam once again. Europe’s economies are flagging, and emerging economies have overspent during their growth marathon. Only the United States has cured its financial infection. Household debt levels are sinking, the government deficit is shrinking and the IMF has elevated its prognosis for U.S. growth.

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