Currencies After the Crash: The Uncertain Future of the Global Paper-Based Currency System

PREFACE: A SYSTEM ON SHAKY GROUND

SARA EISEN

The dollar remains at the center of global trade, dominates central bank portfolios around the world, and provides a shelter for nervous investors during economic storms. However, there are two sides to the dollar story. The crisis that began in 2007 has highlighted cracks in the dollar-centric international monetary system, resulting in shaken confidence in the dollar. Massive and destructive imbalances, such as the U.S. trade deficit and China’s trade surplus, threaten the world economy. Central banks and federal governments alike, including those of the United States, are finding themselves in uncharted territory, having absorbed massive debt to stimulate their economies during the crisis. For instance, ...