英文政治学论文2

121 I n the wake of the crisis, doubts are pervasive about whether the dollar will retain its international role. Recent events have not exactly enhanced the reputation of the United States as a supplier of high-quality � nancial assets. It would not be surprising if demonstrations of the dysfunctionality of American � nancial markets soured investors on U.S. debt securities. Meanwhile, a budget-de� cit-prone U.S. government will be pumping out debt as far as the eye can see. It will be tempted to resort to in� ation to work down the burden. � at temptation will be even greater now that a majority of its marketable debt is held by foreigners. Foreign investors, the Cassandras darkly warn, will not sit still for this. � ey will seek to protect themselves by curtailing their dollar holdings. � e end result, the worriers caution, could be a mass migration to other currencies. If developments in the United States raise doubts about the dollar’s inter- national role, developments abroad deepen them. � e post–World War II recovery of Western Europe and Japan and now the emergence of China, India, and Brazil have reduced the economic dominance of the United States. It is not obvious why the dollar, the currency of an economy that no longer accounts for a majority of the world’s industrial production, should be used to invoice and settle a majority of the world’s international transactions. Nor is it clear why the dollar should still constitute a majority of the reserves of central banks and governments. As the world economy becomes more multipolar, its chapter 6 Monopoly No More nancial markets soured investors on U.S. debt securities. Meanwhile, a budget-de� cit-prone U.S. government will be pumping out debt as far as the budget-de� eye can see. It will be tempted to resort to in� ation to work down the burden. eye can see. It will be tempted to resort to in� � at temptation will be even greater now that a majority of its marketable debt � is held by foreigners. It is not obvious why the dollar, the currency of an economy that no longer accounts for a majority of the world’s industrial production, should be used to invoice and settle a majority of the world’s international transactions. Nor is it clear why the dollar should still constitute a majority of the reserves of central banks and governments. As the world economy becomes more multipolar, its 122 Exorbitant Privilege monetary system, logic suggests, should similarly become more multipolar. � is reasoning implies at a minimum that the dollar will have to share its international role. Moreover, what is true of the economic logic for a dollar-based interna- tional monetary and � nancial system is true also of its political logic. When a� er World War II the United States stationed large numbers of troops in Europe and Asia, our allies there saw supporting the greenback as an appro- priate quid pro quo. Today, in contrast, China, our largest foreign creditor, is not a close ally. In many parts of the world, the American security umbrella is neither as essential as it once was nor, indeed, as welcome. It is not obvious that the best way for foreign countries to ensure their security is by propping up the dollar. All this makes them increasingly critical of America’s exorbitant privilege. 0 5 10 15 20 25 30 35 40 45 50 55 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 % Equities + Foreign Direct Investment Corporate Bonds Treasury Bonds Agency Securities Figure 6.1. Foreign Holdings of U.S. Securities as a Percentage of Total U.S. Amount Outstanding. Source : Federal Reserve Board Flow of Funds Accounts of the United States. Figure 6.1. Foreign Holdings of U.S. Securities as a Percentage of Total U.S. Amount Outstanding.Figure 6.1. Foreign Holdings of U.S. Securities as a Percentage of Total U.S. Amount Outstanding. Source : Federal Reserve Board Flow of Funds Accounts of the United States. monetary system, logic suggests, should similarly become more multipolar. � is reasoning implies at a minimum that the dollar will have to share its � international role. Monopoly No More 123 An Inconvenient Truth � ere is only one problem with these arguments. It is that there has been little actual diminution of the dollar’s role in international transactions. � ere has been no discernible movement away from the dollar as a currency in which to invoice trade and settle transactions. One recent study for Canada, a country with especially detailed data, shows that nearly 75 percent of all imports from countries other than the United States continue to be invoiced and settled in U.S. dollars. 1 � e dollar similarly remains the dominant currency in the foreign exchange market. � e most recent Bank for International Settlements survey showed that the dollar was used in 85 percent of foreign exchange transactions worldwide, down only marginally from 88 percent in 2004. 2 Some 45 percent of international debt securities are denominated in dollars. 3 OPEC continues to price its petroleum in dollars. While U.S. nemeses like Iran and Venezuela regularly o� er proposals for pricing oil in another currency, there is no agreement about what constitutes an attractive alternative. � e famous instance was in November 2007 when, at a closed-door session in Riyadh, a camera was inadvertently le� on, broadcast- ing into a nearby press room a quarrel between the Iranian and Saudi foreign ministers over whether OPEC should move away from dollar pricing. In Octo- ber 2009 a sensational if undocumented press report had the Gulf States con- spiring with China, Russia, Japan, and France—now there’s an odd coalition—to shi� the pricing of oil away from dollars. 4 But so far all this has been a tempest in a teapot. Data on the currency composition of central banks’ foreign reserves are incomplete, since not all countries report. China, importantly, is among the nonreporters. But data from the IMF, the best source on the subject, show the share of dollars in total identi� ed o� cial foreign exchange holdings as of the � rst quarter of 2010 as 61 percent, down only marginally from 66 percent in 2002–2003. 5 If one goes back further, to the � rst half of 1990s, the dollar’s share in total identi� ed o� cial holdings of foreign exchange was actually lower than recently. Plus ç a change . Although the IMF’s statistics are not perfect, other sources point in the same direction. For example, surveys of � nancial institutions conducted by the U.S. Treasury suggest that foreign central banks continued to accumulate actual diminution of the dollar’s role in international transactions. � ere has actual diminution of the dollar’s role in international transactions. � been no discernible movement away from the dollar as a currency in which to invoice trade and settle transactions. One recent study for Canada, a country with especially detailed data, shows that nearly 75 percent of all imports from with especially detailed data, shows that nearly 75 percent of all imports with especially detailed data, shows that nearly 75 percent of all imports countries other than the United States continue to be invoiced and settled in U.S. dollars. � e dollar similarly remains the dominant currency in the foreign �dollars. 1 � exchange market. � e most recent Bank for International Settlements survey exchange market. � showed that the dollar was used in 85 percent of foreign exchange transactions worldwide, down only marginally from 88 percent in 2004. Some 45 percent worldwide, down only marginally from 88 percent in 2004. 2 Some 45 percent of international debt securities are denominated in dollars. OPEC continues of international debt securities are denominated in dollars. 3 OPEC continues to price its petroleum in dollars. nonreporters. But data from the IMF, the best source on the subject, show the share of dollars in total identi� ed o�the share of dollars in total identi� cial foreign exchange holdings as of ed o� the � rst quarter of 2010 as 61 percent, down only marginally from 66 percent in the � 2002–2003. If one goes back further, to the � rst half of 1990s, the dollar’s share If one goes back further, to the �2–2003. 5 If one goes back further, to the � in total identi� ed o�in total identi� cial holdings of foreign exchange was actually lower than ed o� recently. Plus ç a change 124 Exorbitant Privilege treasury bonds following the outbreak of the crisis—if anything at an acceler- ating pace. 6 � ere was a sharp fall in foreign central bank accumulation of “agency securities”—the securities of the quasi-governmental mortgage agencies Freddie Mac and Fannie Mae—but not of U.S. treasuries. Still the One What explains the gap between rhetoric and reality? Above all the simple fact that, jeremiads about American declinism notwithstanding, the United States remains the largest economy in the world. It has the world’s largest � nancial markets. � is may not be true forever, but remains true now. Moreover, the dollar has the advantage of incumbency. Consider an exporter deciding in what currency to quote the prices of his exports. Exporters want to limit � uctuations in their prices relative to those of competing goods in −300 −200 −100 0 100 200 300 400 500 600 700 24-Dec-2003 22-Dec-2004 21-Dec-2005 20-Dec-2006 19-Dec-2007 17-Dec-2008 16-Dec-2009 Billions of U.S. dollars 52-week sum of Treasury purchases 52-week sum of Agency purchases Figure 6.2. 52-Week Change in Custodial Holdings on Behalf of Foreigners. Source : Federal Reserve Board. � ere was a sharp fall in foreign central bank accumulation of � “agency securities”—the securities of the quasi-governmental mortgage agencies Freddie Mac and Fannie Mae—but not of U.S. treasuries. Figure 6.2. 52-Week Change in Custodial Holdings on Behalf of Foreigners. 52-Week Change in Custodial Holdings on Behalf of Foreigners. Source : Federal Reserve Board. What explains the gap between rhetoric and reality? Above all the simple fact that, jeremiads about American declinism notwithstanding, the United States remains the largest economy in the world. It has the world’s largest � nancial remains the largest economy in the world. It has the world’s largest � markets. � is may not be true forever, but remains true now. markets. � Moreover, the dollar has the advantage of incumbency. Consider an Monopoly No More 125 order to avoid confusing their customers. If other exporters are invoicing and settling their transactions in dollars, each individual exporter has an incentive to do likewise. 7 And to continue doing so. And what is true of trade is true of other international transactions. � at so many exports are priced and settled in dollars makes the dollar the dominant currency in foreign exchange markets, since exporters from other countries, when they want to pay their suppliers, workers, and shareholders, must � rst convert the proceeds back to their home currency. It makes the dollar the dom- inant unit in currency forward and futures markets, since exporters will want to use those markets to ensure against unexpected exchange rate movements while the transaction is still under way. Since it pays for exporters of � nancial services, like exporters of merchandise, to avoid confusing their customers, they, too, will price their products in the same currency as their competitors. � us, the fact that international bonds were denominated in dollars in the past creates a tendency for them to be denominated in dollars in the present. For many central banks, it similarly makes sense to stabilize their exchange rates against the dollar even though the United States no longer accounts for a majority of their foreign trade and � nancial transactions—if for no other reason than that other countries stabilize their exchange rates against the dollar. Because other countries peg to the dollar, doing likewise stabilizes a country’s exchange rate not just against the United States but more broadly. Beyond that, there is a reluctance to shi� away from dollar pegs, since they are the established basis for monetary policy, and a change may sow uncertainty. Central banks will want to hold reserves in the same currency in which the country denominates its foreign debt and invoices its foreign trade, since they use those reserves to smooth debt and trade � ows. � ey will want to hold reserves in the currency of the country to which they peg, since they use them to intervene in foreign exchange markets. Although central banks naturally welcome returns on their investments, they also seek to limit the riskiness of their reserve portfolios. Importantly, the currency to which they peg will be the most stable in terms of its domestic purchasing power (that is, in its command over domestic goods and services). And the identity of the predominant anchor currency is no mystery. As of mid- 2009, � � y-four countries pegged to the U.S. dollar, compared to just twenty- seven to the euro, the runner-up. 8 For many central banks, it similarly makes sense to stabilize their exchange rates against the dollar even though the United States no longer accounts for a majority of their foreign trade and � nancial transactions—if for accounts for a majority of their foreign trade and � no other reason than that other countries stabilize their exchange rates against the dollar. Because other countries peg to the dollar, doing likewise stabilizes a country’s exchange rate not just against the United States but more broadly. Central banks will want to hold reserves in the same currency in which the country denominates its foreign debt and invoices its foreign trade, since they use those reserves to smooth debt and trade � ows. �they use those reserves to smooth debt and trade � ey will want to hold ows. � reserves in the currency of the country to which they peg, since they use them to intervene in foreign exchange markets. 126 Exorbitant Privilege Calculations of what combination of dollars and other currencies are attractive to central bank reserve managers assume for convenience equally liquid markets in bonds and deposits denominated in di� erent currencies. 9 � is assumption may be unrealistic, but relaxing it only works in the dollar’s favor. Central banks value liquidity in their reserve instruments so that they can use them in market intervention. If a � nancial instrument is not readily convertible into cash, then it is not readily used in market operations. It therefore matters greatly that the market in U.S. treasury bonds and bills has unrivaled liquidity whether measured by turnover or transactions costs. � e U.S. treasury market is, quite simply, the most liquid � nancial market in the world. � is re� ects the scale of the U.S. economy and its � nancial devel- opment. But the status quo is self-reinforcing. Because the U.S. market is so liquid, foreign investors undertake transactions and concentrate their holdings there. � e fact that they undertake their transactions and concentrate their holdings there in turn lends it additional liquidity. � us, in the same way that incumbency is an advantage in the competi- tion to be an international � nancial center, it is an advantage in the competition for reserve-currency status. Incumbency is not everything. And its advantages may be weakening; the costs of comparing prices in di� erent currencies and switching between them are declining with the development of modern infor- mation technologies. But as any politician will tell you, the advantages of incumbency are not to be dismissed. � ey are one reason that, questions about its reelection prospects notwithstanding, the dollar is unlikely to be voted out of o� ce just yet. Small Potatoes Yet another factor favoring a continuing role for the dollar is that all the other candidates for international currency status have serious shortcomings of their own. � e UK and Switzerland are simply too small for the pound sterling and Swiss franc to be more than subsidiary reserve and international currencies. Both lack the size to provide debt instruments on the scale required by the global � nancial system. � e UK is barely a sixth the economic size of the Unit- ed States. Switzerland is barely a thirtieth. Given the importance of market size for liquidity, the share of their currencies in global reserves is even less. Sterling It therefore matters greatly that the market in U.S. treasury bonds and bills has unrivaled liquidity whether measured by turnover or transactions costs. � e U.S. treasury market is, quite simply, the most liquid �costs. � nancial market e U.S. treasury market is, quite simply, the most liquid � in the world. � is re�in the world. � ects the scale of the U.S. economy and its � is re� nancial devel- ects the scale of the U.S. economy and its � opment. But the status quo is self-reinforcing. Because the U.S. market is so liquid, foreign investors undertake transactions and concentrate their holdings there. � e fact that they undertake their transactions and concentrate their there. � holdings there in turn lends it additional liquidity. Monopoly No More 127 accounts for less than 4 percent of identi� ed global reserves, the Swiss franc for less than 1 percent. � e same is even truer of still smaller economies. When Russia’s central bank announced in 2009 that it was diversifying its reserves to include Cana- dian dollars (nicknamed “loonies”), those anticipating the death of the U.S. dollar gleefully took note. But the announcement caused nary a ripple in the U.S. dollar exchange rate. Canadian government bond markets are simply too small to make a dent in global reserve portfolios or for Russia’s decision to buy loonies to have a discernible impact on the greenback. Japan is a larger economy, but its government long discouraged interna- tional use of the yen on the grounds that this would undermine Japan’s ability to maintain a competitive exchange rate and would otherwise complicate its conduct of industrial policy. 10 � is reluctance to internationalize the yen may now be a thing of the past. Japanese o� cials are anxious to see their currency play a larger role, especially in Asia. But past policy continues to shape market liquidity. And a decade of no growth and zero interest rates have made holding reserves in yen unattractive. � e yen accounts for barely 3 percent of total iden- ti� ed o� cial holdings of foreign exchange. 11 Going forward, Japan’s aging pop- ulation and antipathy to immigration do not favor a rapidly expanding global role for its economy or its currency. Whom to Call � is leaves the euro, notwithstanding its recent di� culties, as the most serious rival to the dollar for now. 12 � e euro area possesses the requisite scale. Its exports are nearly double those of the United States. 13 Germany is a major exporter of capital goods to emerging Asia. Euro-area companies operate branch plants in countries to their east, countries that are increasingly linked into Western Europe’s production networks and supply chains. Euro-area banks own and operate many of Eastern Europe’s banks. � is makes the euro a logical currency in which to invoice