“ How to dismantle a reserve currency,” written by Maxwell Advisory Board Professor of International Affairs Daniel McDowell, was published by the Atlantic Council. Following is an excerpt:

The role of politics in shaping the global currency hierarchy is seen as secondary to these baseline economic fundamentals. That is changing as the second Donald Trump administration has thrust politics to the fore of a renewed discussion about the dollar’s reserve currency status.

In the great global currency debate, market forces have never been more passé and political forces have never been so prominent. As the Trump administration’s foreign policy upends the liberal international order (LIO) upon which dollar dominance is built, questions are being raised about the future of the dollar and the potential for change in the international currency system—and rightly so.

As realist scholar Robert Gilpin argued, “Every international monetary regime rests on a particular political order.” With the survival of the LIO now in question, Gilpin’s thesis is being tested in real time.