The United States would not necessarily lose out if other currencies emerged as alternatives to the dollar‘s status as the world’s so-called reserve currency, a top U.S. central banker said on Tuesday.
William Dudley, president of the Federal Reserve Bank of New York, did not comment on U.S. interest rates in a speech. Rather he said Americans should not be concerned if, for the right reasons, other currencies started to eat into the dollar‘s 60-percent share of foreign exchange reserve holdings.
“I don’t see this as a zero-sum game,” Dudley, one of the most influential Fed policymakers, said in prepared remarks to a conference in Zurich that was closed to reporters.
“If other countries’ currencies emerge to gain stature as reserve currencies, it is not obvious to me that the United States loses,” he said, as long as it “is being driven by their progress, rather than by the U.S. doing a poorer job.”
The dollar supplanted the British pound in the last century to become the world’s most important reserve currency, or one that is widely held and traded globally because it is easily and safely exchanged into local currencies.
In November, the International Monetary Fund admitted China’s yuan into its benchmark currency basket alongside the dollar, euro, pound sterling and yen.
“I believe that the most important goal must be to keep our own house in order,” Dudley said at the conference hosted by the IMF and the Swiss National Bank. “If we do this, then I expect that the U.S. dollar will earn the right to remain the most important reserve currency in the world.”