Tuesday, April 20, 2021
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Home Breaking News The dollar remains the world's dominant currency!

The dollar remains the world’s dominant currency!


Vice President James Daniel Stewart Jr., responsible for the treasury and capital market, left Raiffeisen Bank Romania after almost 21 years. I interviewed him in February 2008, immediately after George Soros had said at the Davos economic forum that “we are living the end of the dollar era”. I asked him if he thought the American billionaire’s prediction was realistic. He told me that “it is clear that emerging emerging economies, such as China and India, are an interesting complement to the global economy,” but although these countries will be “important drivers of global economic growth,” “They will not be able to dethrone the dollar from the world’s dominant currency.” History shows that “the dominant currencies have always come from countries with an extremely influential foreign policy. Even though the eurozone and China are expanding economically, they are still struggling to gain a leading role on the global political scene. ” The fact that the United States acts, in some cases, as a “global gendarme” will put “pressure on the dollar.” However, “the hegemony of the dollar will continue, for the simple reason that the United States still has the“ deepest ”and most liquid markets. capital of the world, due to the force of American law, which protects investors.

Stewart said that “in the United States there are large sums of money from pension funds and other institutional investors, money that must be invested monthly.” Fund managers “are not paid to simply place them in government securities.” They “will focus on capital markets” and “there are always certain securities or entire sectors whose price goes up.”

Asked to highlight the main risks that may affect the financial stability of the Romanian banking system, James Stewart replied: “There are several risks that influence each other. For example, the government’s lack of fiscal prudence. The increase in salaries in the public administration sector was, on average, 30% last year, and pensions in the public system increased by 60%. How does the government plan to finance this spending increase? The government intends to enter the international capital markets to finance its fiscal deficit “.

The period Stewart was referring to, I recall, was when pensions were rising “from GDP,” but a recent, similar one followed, with Wage-led Growth at the center of the talks, which seems to show that the risks the former vice president drew attention to are the same, as if we were being led in the same way.

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