In a recent post, I flagged that US reserve currency status emerged unscathed from all the policy tumult of 2025. IMF data show foreign reserve managers didn’t bail on the US, even after the chaotic rollout of reciprocal tariffs in the second quarter when the Dollar was tumbling. The lesson from that episode - at least for me - is that reserve currency status is much more deeply ingrained than many of us thought. It’s one thing to avoid damaging US reserve currency status. After all, maybe there’s just lots of inertia to this kind of thing. But it’s another for the exorbitant privilege - the ability of the US to ... (full story)