As if all of the new international finance issues that your firm will now have to deal with aren’t enough, you recently read an article in the paper about the possibility that the dollar may no longer be considered the international reserve currency. You passed this information on to the CFO, who said that he would like to discuss the following issues:
• What factors should contribute to the dollar continuing to be the international reserve currency?
• What factors might lead to the demise of the dollar as the international reserve currency?
• What may happen, and why? This must include the following:
• Your thoughts about another fiat currency replacing the dollar
• If the international reserve currency—whether the dollar or something else—should once again have material to back it up, like gold, silver, oil, uranium, platinum, or timber. Why you believe so?
The question belongs to Economics particularly Macroeconomics. The question here is about a hypothetical scenario where the dollar will no longer be used as international reserve currency. The happening and non-happening of this event is discussed in the solution.
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