Book of the week: Exorbitant Privilege by Barry Eichengreen

(Oxford, $27.95)

Economist Barry Eichengreen isn’t being alarmist when he tells us that the dollar’s long run as the planet’s top currency may be nearing its end, said Christopher Caldwell in the Financial Times. Opening with an account of how the dollar replaced the British pound as the world’s reserve currency, his new book achieves “a rare combination of macroeconomic mastery” and “historical erudition.” Its aims are to examine whether the dollar still deserves its privileged status and to explore whether the world has other options. In the end, he concludes that neither the euro nor China’s renminbi is ready to “vanquish” the dollar, said The Economist. Current policies greatly limit those currencies’ liquidity, making it likely the dollar will remain a popular reserve currency even if the world gradually shifts to a “multipolar” system. Not that Eichengreen ignores the dire potential effects of soaring U.S. deficits. “The only plausible scenario for a dollar crash,” he warns, “is one in which we bring it upon ourselves.”

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