A working paper published by the Bank of England (BoE) has concluded the US would be caught in a “bubble of equilibrium” if it was not for the ‘exorbitant privilege’ it holds as the world’s dominant reserve currency.
Examining differences between the UK (1871–1914) and the US (after 1945) in terms of the benefits both enjoyed while issuing a global reserve currency, Carlos Eduardo van Hombeeck reveals a creditor country (UK) enjoyed different benefits to its US successor (now a debtor country)
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