Here's more"What does this imply for the reserve currency role...

Here's more

"What does this imply for the reserve currency role of the dollar? It implies that
whether the dollar retains its reserve currency role depends, first and foremost, on
America’s own policies. Serious economic mismanagement would lead to the
substitution of other reserve currencies for the dollar. In this context, serious
mismanagement means policies that allow unsustainably large current account deficits to
persist, lead to the accumulation of large external debts, and result in a high rate of U.S.
inflation and dollar depreciation. Clearly, this would make holding dollar reserves
unattractive. This is a lesson of British history in the sense that an inflation rate that ran at roughly 3 times U.S. rates over the first three quarters of the 20th century, in
conjunction with repeated devaluations against the dollar, played a major role in
sterling’s loss of reserve currency status."

http://elsa.berkeley.edu/~eichengr/research/tawney_lecture2apr29-05.pdf