Dollar Dominance: Fundamentals, Nature, and Present Structure
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In his book “Dollar Dominance,” Junji Tokunaga critically analyzes the U.S. dollar’s dominance as an international currency through an analysis of U.S. dollar gross balance sheets in the shadow banking system at global, systematically important banks.
It begins by drawing upon Minsky and Kindleberger’s financial fragility hypothesis, explaining how analysis of dynamics in balance sheet expansion helps to reveal the fundamentals of the dollar standard system. It then examines the dollar standard system in the 2000s and during the Global Financial Crisis (GFC) of 2007-09, showing how endogenous finance of the dollar drove said banks to overstretch their balance sheets. An analysis of the dollar standard system post-crisis suggests that U.S. Treasury securities as universal collateral assets have acted as a bedrock for the present dollar standard system.
