US Dollar's Reign

Barry Eichengreen at the WSJ joins those saying that the days of the US Dollar being the lingua franca of currency between countries are numbered. I've heard this argument for a while now, but it still hasn't happened and I suspect that it will still take a while before it does.

The Euro still isn't quite trusted because of many reasons probably, but chief amongst them has to be the situations in Ireland and Greece demonstrating that there are still major issues to contend with regarding stability and, frankly, just who is in charge. Unintentionally (and rather ironically), the Euro is somewhat imposing the gold standard on many of these European countries that are having financial difficulties (see Spain). They don't have the flexibility of inflating or deflating their economy because the Euro won't let them, effectively.

And the Chinese Yuan...? I would suspect it has a fairly long way to go. It may become the de facto currency for Asia--particularly SE Asia, but they aren't near as transparent as they need to be for other international businesses to trust having vast reserves of their currency--or at least I would strongly suspect that.

But we shall see. If the US debt keeps piling up as it is, the US Dollar could possibly force other countries to think differently about their reserve currency, I suppose.