But China’s unfolding economic slowdown, concerns about its soaring debts and unease from neighbors that its investment is really a new form of colonialism have combined to moderate its infrastructure plans.
The Chinese government’s restrictions on taking money out of the country and its alarming detentions of foreigners — often in parallel with geopolitical scrapes — have tested the appeal of holding money embossed with the image of Chairman Mao.
“What about China?” Mr. Blyth asked, rattling off possible alternatives to the dollar. “I could go there and disappear. This doesn’t inspire confidence. Once you start that kind of politics, you cannot be serious as a global currency.”
The most formidable competitor to the dollar has long been the euro. In September, the president of the European Commission, Jean-Claude Juncker, devoted part his final State of the Union address to lamenting that the bloc was paying for 80 percent of its energy imports in dollars, though just 2 percent came from the United States.
“We will have to change that,” Mr. Juncker declared. “The euro must become the active instrument of a new sovereign Europe.”
But the most trusted euro-denominated investment, German government bonds, are in chronically short supply. With a deep cultural aversion to debt, Germany has been reluctant to finance spending by selling bonds. As a result, investors seeking ultrasafe places to stash savings have very few options in the euro currency. By comparison, American savings bonds are in virtually limitless supply.
A series of crises within the 19 countries that share the euro has provoked more animosity than unity, revealing a foundational defect: The euro is a common currency lacking a common political structure that can guarantee a robust response when trouble arises.
Article source: https://www.nytimes.com/2019/02/22/business/dollar-currency-value.html?partner=rss&emc=rss
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