So they might also consider another potential scenario: Ever since President Richard Nixon de-linked the dollar from gold, doomsayers have predicted the imminent demise of the dollar as the world reserve currency. Having the world reserve currency has allowed the United States to run very large budget, merchandise trade and current account deficits for decades. Nations with dollar surpluses can’t sit on them; they recycle them as investments in the United States. That is why New York has the most liquid financial markets in the world. These strong markets in turn encourage many foreign central banks to hold their assets in New York as well.

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