You are here

Dire dollar shortage shows world failed to fix key crisis flaw

Section: Daily Dispatches

By Christopher Anstey and Enda Curran
Bloomberg News
Sunday, March 22, 2020

The global rush for dollars that's been roiling the $6.6 trillion-a-day foreign-exchange market has showcased a missing piece of financial-safety architecture that world policy makers never addressed in the aftermath of the 2008 crisis.

The financial system's reliance on one keystone currency proved to be an amplifier of shocks more than a decade ago. Yet since then the greenback's role has climbed even further as borrowers outside of America ramped up dollar-denominated debt. That's again adding an enormous layer of stress on markets.

... Dispatch continues below ...


Buy metals at GoldMoney and enjoy international storage

GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit:

"It's precisely what the global economy does not need at this moment," Alexander Wolf, head of Asia investment strategy at JPMorgan Private Bank and a former U.S. diplomat in China, said of a strong dollar. "It tightens financial conditions, make servicing dollar debt more expensive, and can cause pass-through inflation just when that is not needed."

As often occurs during bouts of extreme currency fluctuation, there's been speculation about something akin to the 1985 Plaza Accord that sought to rein in a runaway dollar. Observers discount that possibility now. But one of the key takeaways from the current episode may be that one important currency finds itself burnished: China's yuan.

The salve for emergency dollar demand that the Federal Reserve came up with during the global financial crisis -- giving other central banks the power to deploy greenbacks abroad via swaps with the U.S. -- has been applied again. The Fed broadened the group of counterparts on Thursday, including some emerging economies, though not China or India. ...

"The dollar's surge will renew calls for a shift from a dollar-centric global financial system," said Eswar Prasad, who once led the International Monetary Fund's China team and is now at Cornell University. "But the pandemic has also fractured global governance, making it harder to envision the G-20 devising a viable alternative."

A similar surge in the dollar occurred back in 2008, prompting China's then-central bank chief, Zhou Xiaochuan, to call for a super-sovereign reserve currency in early 2009. The following year South Korean officials tried to get the Group of 20 to consider permanent exchange-market architecture to address vulnerabilities. ...

... For the remainder of the report:

* * *

Toast to a free gold market
with great GATA-label wine

Wine carrying the label of the Gold Anti-Trust Action Committee, cases of which were awarded to three lucky donors in GATA's recent fundraising campaign, are now available for purchase by the case from Fay J Winery LLC in Texarkana, Texas. Each case has 12 bottles and the cost is $240, which includes shipping via Federal Express.

Here's what the bottles look like:

Buyers can compose their case by choosing as many as four varietals from the list here:

GATA will receive a commission on each case of GATA-label wine sold. So if you like wine and buy it anyway, why not buy it in a way that supports our work to achieve free and transparent markets in the monetary metals?

To order a case of GATA-label wine, please e-mail Fay J Winery at

* * *

Support GATA by purchasing
Stuart Englert's "Rigged"

"Rigged" is a concise explanation of government's currency market rigging policy and extensively credits GATA's work exposing it. Ten percent of sales proceeds are contributed to GATA. Buy a copy for $14.99 through Amazon --

-- or for an additional $3 and a penny buy an autographed copy from Englert himself by contacting him at

* * *

Help keep GATA going:

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit: