US/Dollar/hegemony
The term describes a geopolitical phenomenon of the 20th century in which the U.S. dollar, a fiat currency, became the primary reserve currency internationally. Three developments allowed dollar hegemony to emerge over a span of two decades.
Contents
Stages of development
Abandoning the gold standard
The Bretton Woods system established a fixed exchange rate regime based on a gold-backed dollar in 1945. The USA did not view cross-border flow of funds necessary or desirable for promoting trade or economic development. In response to the accrual of negative consequences from the Triffin dilemma[1], President Richard Nixon abandoned the Bretton Woods regime in 1971 and suspended the dollar's peg to gold as US fiscal deficits from overseas spending caused a massive drain in U.S. gold holdings.
Petrodollar
Denomination of oil in dollars after the 1973 Middle East oil crisis increased demand for US dollars; see petrodollars.
Deregulation
The emergence of deregulated global financial markets after the Cold War made cross-border flow of funds routine.
References
Notes
See also
video: The_absurdity_of_Dollar_hegemony
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