How the SDR Substitution Account will Facilitate US Foreign Debt Consolidation
By JC Collins
There are many reasons why the normalization of monetary policy will need to happen in the foreseeable future. This eventual increase in interest rates will be the turning point which sets off the next stage of the multilateral monetary transition. This is a transition which will address the balance of payments deficits and allow for the equal representation of the emerging economies.
The large accumulation of US denominated securities in the foreign exchange reserve accounts around the world needs to be reversed. This unwinding of the dollars primary reserve currency status must be leveraged against the losses associated with the depreciation of the dollar which will ensue as dollar demand decreases around the world.