The curse of the global dollar

IT'S been called the "exorbitant privilege"; it might also be termed "the indestructible curse". Americans are proud of the fact that the dollar - their money - is also the world's dominant international currency.

But this very same global role also helps explain some of Americans' major complaints about the world economy: why we constantly run sizeable trade deficits; and why US manufacturers often are at a price disadvantage with foreign competitors.

It's not that other currencies (mainly the euro and yen) don't play a global role. They're also used to pay for imports and for cross-border borrowing and lending. The dollar simply overshadows them. Dollars constitute 63 per cent of countries' foreign exchange reserves, almost triple the next closest currency, the euro (22 per cent), says the International Monetary Fund.