Newsletter – May, 2023

If we were to look at the global monetary history over the last few centuries, the popularity of different reserve currencies have ebbed and flowed, reflecting the shifting fortunes of leading global economies. Economists argue that the demand for currencies over the long run revolves around the economic relevance and dominance of that respective country. In general, the larger and more powerful a country’s economy is, the greater the network effect, and the more interlinked they are to the global economy. Large share in global trade implies greater demand to hold that country’s currency in reserve.