A research report of the CFA Institute in the United States, entitled «The exorbitant privilege of the dollar», analyzes the future of the most important currency through the problem of public debt. While the dollar remains the most important currency for state foreign reserves, more and more voices raise question marks on the viability of American fiscal policy and public debt sustainability. As other states have their own fiscal issues, American state bonds begin to lose their interest. For example, the euro had a positive evolution towards the dollar, despite the policy of the European Central Bank to reduce the reference interest. At the same time, gold has reached a record price in April this year, so that it will then decrease, signaling the return of investors for US government securities, denominated in dollars, of course. (Source of information: articles from Financial Times) We report some key elements in this report, which we invite you to read entirely at the link: https: //rpc.cfainstate.org/sites/default/files/-/media/documents/survey/dollars-exorbitant-privilege-survey-report.pdf. won the status as a result of the Bretton-Woods system, initially having gold coverage; This status allowed the United States of America to finance their deficit easily, as the other countries needed to keep their reserves in dollars. Even after the cessation of the Bretton-Woods system, the dollar has retained its special status, allowing the United States to increase its public debt at low costs. Under these conditions, the dollar was constantly appreciated, which affected the competitiveness of the American economy on export. However, the first risks also appear: the public debt has reached a level that can no longer be sustained, and thus investors begin to lose their confidence. Such a recalibration could reduce the value of the dollar or raise interest, or both. Local perspective: For Romania it is important what happens with the euro. Leo/dollar course is determined indirectly, by euro. Commercial exchanges with the US, and therefore the need for dollar, are small compared to trade with European space. Also, the public debt of Romania is predominantly denominated in euros and lei, an insignificant percentage being denominated in dollars. However, the foreign exchange reserves of the National Bank of Romania include in a significant proportion the dollar (besides the euro, as a predominant currencies), so the dollar fluctuation can affect the value of the currency reserves of our country. «We look closely at the evolution of the dollar, less as a direct report for the quotation of the leu, but more as an indicator of the state of the United States economy, which sets the tone of the world economy. «In the context of a commercial war, the countries can use, in addition to the tariff and non -tariff barriers (regulations), and the coins (often by devaluation). As a result, both the exchange rates and the interest rates can present a high volatility. Thus, given the global context with high uncertainty, the context, which can generate, which can generate, – including on various countries and currencies – it is essential. ”Said Adrian Codirlaşu, CFA – president of the CFA Romania Association
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