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Not Triffin, not Miran: Rethinking US external imbalances in a new monetary order
In a recent Vox column, Bordo and McCauley argued that foreign central banks no longer drive US external deficits, and that fears voiced by Stephen Miran, Chair of the US Council of Economic Advisers, of a revived Triffin dilemma are misplaced. This column takes a different view: while agreeing that the Triffin logic no longer applies, it argues that the deeper reason lies in the structural evolution of global finance. We no longer live in a world where the reserve status of the dollar hinges on the US current account. That status now depends on the credibility of US institutions, the depth of its markets, and the robustness of the infrastructure that underpins the global dollar system.
