For more than half a century, the dollar has been not just America's currency but the world's. It is used globally by importers, exporters, investors, governments and central banks alike. This singular role of the dollar is a source of strength for the United States. It is, as a critic of U.S. policies once put it, America's "exorbitant privilege."
But now, with U.S. budget deficits extending as far as the eye can see, holding dollars is viewed as a losing proposition. Some say that the dollar may soon cease to be the world's standard currency which would depress U.S. living standards and weaken the country's international influence.
In Exorbitant Privilege, one of our foremost economists, Barry Eichengreen, traces the rise of the dollar to international prominence. He shows how the greenback dominated internationally in the second half of the 20th century for the same reasons that the United States dominated the global economy. But now, with the rise of China, India, Brazil and other emerging economies, America no longer towers over the global economy. It follows, Eichengreen argues, that the dollar will not be as dominant. But this does not mean that coming changes need be sudden and dire or that the dollar is doomed to lose its international status. Challenging the presumption that there is room for only one true global currency, Eichengreen shows that several currencies have regularly shared this role. What was true in the distant past will be true, once again, in the not-too-distant future. The dollar will lose its international currency status, Eichengreen warns, only if the United States repeats the mistakes that led to the financial crisis and only if it fails to put its fiscal and financial house in order.
Incisive, challenging and iconoclastic, Exorbitant Privilege, is a fascinating analysis of the changes that lie ahead. It is a challenge, equally, to those who warn that the dollar is doomed and to those who regard its continuing dominance as inevitable.
Industry Reviews
"incredibly relevant work" - Business Destinations "Short and eminently readable...In just 177 pages of text, [Eichengreen] provides a wealth of material for both the lay reader and the scholar...You can't do better than Eichengreen for a solid read on the dollar's wild ride." - American Prospect "A truly superb book on the role and global standing of the dollar--past, present and future. Those exposed to the evolution of the globally economy, and that's virtually all of us, will find his book extremely thoughtful and a great read.'" - Mohamed El-Erian, CEO and co-CIO of PIMCO "A fascinating and readable account of the dollar's rise and potential fall," - The Economist "A rare combination of macroeconomic mastery, historical erudition, good political instincts and the sort of stubborn common sense that is constantly placing familiar problems in a new light." - Christopher Caldwell, Financial Times "Timely.. elegant and pithy." - Harold James, Finance and Development "[A] brisk primer on the dollar's role in the international monetary system." - Bloomberg News " Exorbitant Privileg e is a book for anyone who has been perplexed why, despite the frequent predictions of the dollar's demise over the last fifty years, it has managed to maintain its position as the world's pre-eminent reserve currency. The book includes both a lively historical account of the dollar's role in the international monetary system and an incisive and balanced discussion of future challenges." - Liaquat Ahamed, author of Lords of Finance
"Compact and readable...Eichengreen adds much needed nuance and subtlety to the U.S. dollar debate....is [also] a pithy and amusing history of the international monetary system....for those fascinated by historical figures and events, behind-the-scenes machinations, and the logistical elements that make a complex currency and trade system work, the telling is very well done." - Business Insider "[A] detailed and fast-moving analysis of the rise of the greenback as an international currency." - EnlightenmentEconomics.com "When everyone from Brazil's leader to Sarah Palin questions the dollar's status as a reserve currency, it is time for an expert to sort out the truth from the hyperbole. Barry Eichengreen performs this service with unwavering clarity."- Sebastian Mallaby, Council on Foreign Relations "Eichengreen is the master of international money in history and its troubles.Exorbitant Privilege is a fine account of whence it came and a judicious survey of where it might go." - James K. Galbraith, author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too
"Barry Eichengreen again demonstrates his ability to integrate economic history and theory with political analysis in order to illuminate the critical issues of international finance. The timely and accessible book is must reading for all concerned with the prospective balance of international power--financial, economic and political--in a multi-polar world." - William H. Janeway, Warburg Pincus "[S]urprisingly compact and readable book, Eichengreen adds much needed nuance and subtlety to the U.S. dollar debate . . . a pithy and amusing history of the international monetary system . . . those fascinated by historical figures and events, behind-the-scenes machinations, and the logistical elements that make a complex currency and trade system work, the telling is very well done." - BusinessInsider.com "[A] brief and readable account of how the international monetary system got where it is today and of past efforts, both successful and (mainly) unsuccessful, to reform it." - Foreign Affairs
