Former Canadian Prime Minister Stephen Harper has mentioned Bitcoin as assets alongside gold that could potentially act as alternative reserve currencies. However, the former prime minister still argues that despite growing questions about the dollar’s reserve status, he sees no real prospect that this will change anytime soon. Instead, he sees these alternatives as part of a reserve basket in which the dollar still dominates.
Experience from the 2008 financial crisis
Speaking in one interviewThe former prime minister uses Canada’s post-2008 financial crisis experience to illustrate why he believes the dollar’s reserve currency status is not at risk. According to Harper, Canada emerged relatively unscathed from the crisis after the financial crisis put the US economy in a worse position.
This better economic position led to increased demand and a subsequent appreciation of the Canadian dollar. But, as Harper explains, Canada and the few countries that survived the crisis lacked the ability to “take in the money that was floating”. This Harper experience then showed that the US dollar cannot easily be ousted from its position.
Lack of alternatives
However, the former prime minister suggests that the euro and the Chinese yuan can be seen as the two currencies that can realistically challenge the dollar. Even so, Harper believes that both currencies have their own flaws that keep them from overtaking the dollar. Harper comments on the chances of the euro as follows:
There is every reason to question the long-term value and stability of the euro as well as the US dollar.
However, the former prime minister is much more skeptical about the Chinese currency. He says, “You have no idea what it is really worth at any given time.” In addition, the yuan is vulnerable to “arbitrary measures that the Chinese government will take to reassess its obligations or the value of the currency itself.”
The former prime minister believes it is such shortcomings that will ensure the US dollar remains the most dominant reserve currency for some time.
Do you agree with the former prime minister’s claims that the reserve currency status of the US dollar is not threatened? Let us know what you think in the comments section below.
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