Every 20 to 30 years – whenever, it seems, that America’s current account deficits surge – we hear dire warnings about the end of the dollar’s dominance as the world’s reserve currency. In the past few years these warnings have only intensified. But these predictions are likely to be as wrong now as they have been in the past.

Reserve currency status is a global public good that comes with a cost. With the exception perhaps of the euro, which may emerge in the next decade, no other currency has the necessary characteristics to allow it plausibly to serve the needs of the global economy. And neither any other country nor Europe will be willing to pay the cost. If the dollar’s status is to decline in the future, it will require that Washington itself take the lead in forcing the world gradually to disengage

Ironically, this is exactly what Washington should be doing. Conspiracy theory notwithstanding, claims that the reserve status of the dollar unfairly benefits the US are no longer true. On the contrary, it has become a burden, both for America and the world.