The value of the American dollar might be declining, directly affecting the dollar’s status as the world’s predominant reserve currency, The New York Times reported last week.
World Bank President Robert Zoellick said in a speech at Johns Hopkins University that America’s role in international economics is being heavily impacted by growing competition from China and Europe.
“The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency. Looking forward, there will increasingly be other options to the dollar,” he said.
Zoellick mentioned the Chinese renminbi and the euro as possible alternatives to the dollar in the future.
The Daily Tar Heel talked to UNC economics professor Alfred Fields about what this means for the average American.
Fields said that on the local level, the weakening of the U.S. dollar would affect the prices of imported European goods such as wine, cheese and olives.
If the dollar weakens, there would be an increased consumer demand for domestic goods, Fields said.
“It should turn consumer demand toward American goods because they will be relatively cheaper,” he said.
Fields said that a weakening dollar may not be as bad as we perceive.
“As imported goods become more expensive, our goods get cheaper and it reduces our balance of trade deficit as our exports increase and imports decline,” he said.
What you're saying:
“I think that it shows the American economy needs to be focused on more, so we can keep up with Europe and keep our position as a leader in the world economy.” - Micaela Killius, junior
"I feel, well, kind of uncertain because what scares me about it is the value of currency is decreasing. But I don’t know what the implications are of our currency being replaced. I don’t know if it decreases our global power, I only know it’s bad if our money’s losing value.” - David Hutcheson, junior
"Well, I know the euro is stronger than the dollar and I think the U.S. is lagging behind in economic competition. I think other countries think it’s risky to invest in the US dollar because they can lose more money than gain and this has to do with how heavily in debt they are.” - Sophia Zhang, freshman
“I think it’s the natural progression of America’s hegemonic power shifting.” - Bethany Sharpe, senior
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