Former Canadian prime minister Stephen Harper has talked about bitcoin alongside gold as assets that can potentially act as alternative reserves. However, the ex-premier still argues that despite the growing questions about the dollar’s reserve status, he sees no real hope of that changing anytime soon. Instead, he envies these alternatives becoming part of a basket of reserves in which the dollar continues to dominate.
Experiences of the 2008 Financial Crisis
Speaking in an interview, the ex-premier uses Canadian experiences following the 2008 financial crisis to demonstrate why he believes the dollar’s currency reserve status is not under threat. According to Harper, after the financial crisis left the US economy in a worse position, Canada, on the other hand, emerged from the crisis relatively unscathed.
This improved economic status led to the growing demand and subsequent appreciation in the value of the Canadian dollar. Yet, as Harper explains, Canada, as well as the few countries that survived the crisis, did not have the ability to “absorb the floating currency.” This experience according to Harper at that time showed that the US dollar cannot be easily displaced from its position.
Lack of Alternatives
Yet, the ex-premier suggests that the euro and the Chinese yuan can be considered as the two currencies that can realistically challenge the dollar. Nevertheless, Harper believes both currencies have their own deficits that will prevent them from overtaking the dollar. Commenting on the euro’s chances, Harper says:
There is every reason to have so much more doubt about the long-term value and stability of the euro than the US dollar.
However, the former premier is far more skeptical about Chinese currency, he said, “you have no idea what the real value is at any given time.” Furthermore, it says the yuan is subject to “arbitrary measures that the Chinese government will take in order to revalue its own liabilities or the value of the currency itself.”
The former prime minister believes that it is such deficits that will make the US dollar remain the dominant reserve for some time.
Do you agree with the former premier’s claims that the US dollar’s currency reserve status is not under threat? Tell us what you think in the comments section below.
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