The greenback has been the superpower of the financial and monetary system since 70 years ago. However, a fault line has opened between America’s economic clout and its financial muscle. The author points out three main problems for other countries, in the dollar zone and beyond. As he says: “That is because the costs of dollar dominance are starting to outweigh the benefits,” this is not a statement to be taken lightly. First, foreigners own 20-50% of local-currency government bonds. If the Federal Reserve choose to rise rates, then they (foreigners) are more likely to abandon emerging markets, which would have a significant impact on offshore dollar debt and deposits. A second important problem is the lack of emergency precaution for the
