The Future of the Dollar

While the turmoil in Europe and the uncertain future of the euro have caused a pause in the shift from dollars to euros, countries with large reserves are now overweight dollars, and their effort to balance risks will cause the euro to rise again relative to the dollar. The dollar's salvation will be policies that reduce the growth of the US national debt.

CAMBRIDGE – American economic policy aims for a dollar that is strong at home and competitive abroad. A strong dollar at home means a dollar that retains its purchasing power, thanks to a low rate of inflation. A competitive dollar abroad means that other countries should not implement policies that artificially depress the value of their currencies in order to promote exports and deter imports.

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