UBS on US Dollar’s Dominance
UBS, the Switzerland-based investment bank, believes that the US dollar will continue to dominate the financial world for the foreseeable future. According to Alejo Czerwonko, the Managing Director and Chief Investment Officer Emerging Markets Americas at UBS Global Wealth Management, there are three main reasons for this belief:
- Currency regimes tend to remain stable over time. The US dollar has historically maintained its dominance even as other economic powers rise and fall.
- Liquidity is a key factor for global reserve managers and those involved in international trade, and the US dollar ranks highly in this regard.
- Despite challenges, the US financial and political systems still rank highly in terms of stability, safety, and market openness.
In conclusion, UBS predicts that while there may be some competition in the future, the US dollar will continue to reign supreme. Rising geopolitical tensions could potentially affect the global currency order, but it is unlikely that any single currency will benefit significantly from this.
Hot Take:
The US dollar’s dominance in the global financial system is expected to persist, although it may face some competition. Despite recent challenges, the stability, liquidity, and safety of the US financial and political systems continue to support the dollar’s position. While geopolitical tensions could bring changes to the global currency order, it is unlikely that any one currency will emerge as a clear winner.
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