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A question to Powell has come in towards the end of the Q&A session at the two-day Congressional testimony and was asked, ‘why is the US dollar the world’s reserve currency?”.

Powell answered as follows:

  • There tends to be one reserve currency and there tends to be a stable equilibrium.
  • It’s very long run thing.
  • What could compete with the dollar, the euro? – It is hard to see that the dollar will not be the reserve currency for quite some time.  
  • I don’t see it under threat.
  • In the long run, rising debt would threaten the dollar’s status.