Barry Eichengreen, Paul Blustein, and Brendan Greeley on Dollar Dominance

Shared premise, different mechanisms. All three guests—Barry Eichengreen (Money Beyond Borders), Paul Blustein (King Dollar), and Brendan Greeley (The Almighty Dollar)—agree the dollar keeps its dominant role "for the foreseeable future," in Blustein's phrase, aligning himself with Krugman, Eswar Prasad, and host David Beckworth. Where they diverge is on why, and on how much control the US actually exercises over the dollar system it nominally issues.

Eichengreen: history sets the prerequisites. Drawing on 2,500 years of monetary history, Eichengreen argues international-currency status requires size, stability, liquidity, and security—plus political prerequisites (rule of law, alliance trust). He dates the dollar's rise to two distinct moments: the 1920s, when the newly created Fed backstopped a dollar trade-acceptance market pushed by German-American financier Paul Warburg to free US traders from sterling; and the post-WWII period, when the US was the only market economy left with deep, liquid markets. He treats network effects as real but historically overstated—sterling, the franc, and the mark coexisted comfortably before 1913, and sterling and the dollar both circulated through the 1920s until the latter system collapsed in the 1930s.

Blustein: private markets, not reserve shares, are the real entrenchment. Blustein argues the reserve-currency share of central bank holdings is a weak dominance metric; the stronger evidence is the dollar's grip on FX swap markets, invoicing, and cross-border lending, a point he credits to Hyun Song Shin (former BIS chief economist, now Bank of Korea governor). Unwinding that private-market entrenchment would be "enormously costly, enormously time-consuming." Blustein pairs this confidence with a warning: dollar dominance confers a "Spider-Man" responsibility, particularly around sanctions, which can seriously hurt civilian livelihoods and invite retaliation.

Greeley: sovereignty is won, not assumed. Greeley's frame is that the US has never had unconditional monetary sovereignty—the country adopted a Spanish-derived silver coin (the "dollar," from Joachimsthal, Saxony) rather than minting a new currency at founding, and control over the dollar has had to be built and re-earned over roughly 130 years of crises and regulatory responses (national banking laws, FDIC). He applies this to the eurodollar market: offshore dollar deposits created by foreign banks now total roughly $14 trillion by BIS estimate, comparable to but slightly below US M1, and were created outside Fed jurisdiction before Washington ever noticed them (he cites Fed economist Fred Klopstock's 1960s discovery that London banks were retaining, not redeeming, dollar deposits). Greeley distinguishes regulation—which the Fed lacks abroad, absent an FDIC-equivalent—from control, which the Fed exercises conditionally via swap lines. He also rejects "fiat" as an explanatory shorthand, arguing dollar value rests on a century-plus of regulatory infrastructure (deposit insurance, bank capital rules, legal tender laws) rather than a post-gold "social convention."

Where it conflicts. Blustein pushed back directly on Greeley's sovereignty framing, calling himself "perplexed": if anything, he argued, the existence of eurodollars expands US leverage, since Washington can cut adversaries off from dollar access regardless of where the deposits sit, and offshore banks are still shaped by Basel Committee and Financial Stability Board soft-law expectations. Greeley's reply: he isn't denying sovereignty exists, only that it can be assumed rather than earned—control (swap lines, sanctions leverage) is a different lever than regulation (day-to-day balance-sheet oversight), and the US has the former over offshore dollars but not the latter.

Exorbitant privilege, exorbitant burden. Eichengreen holds that benefits (cheaper Treasury borrowing historically, safe-haven capital inflows during crises, more effective sanctions) outweigh costs (a stronger dollar creating export headwinds, which he ranks roughly 11th among competitiveness factors, well behind worker skills, entrepreneurship, and infrastructure). He dismisses the Mar-a-Lago Accord logic on the same grounds he dismissed Nixon's 1971 import-surcharge threat: neither addressed the US economy's underlying structural problems, and the dollar's roughly 10% depreciation against major currencies last year did little for export competitiveness. Greeley adds a burden Eichengreen doesn't: a "resource curse" from essentially unlimited Treasury demand, which he says has eroded the domestic political habit of compromise—contrasting WWII-era financing debates (Liberty Bond drives, wartime price controls) with today's ability to finance conflicts without any comparable fiscal reckoning.

China shock 2.0. Eichengreen sees a genuine issue—China remains wedded to export/investment-led growth and a roughly 4.6% 2026 growth target it will hit via exports regardless of global absorption capacity—but argues this round likely burdens Europe more than the US, which has already substantially decoupled from direct Chinese imports. His prescription (both countries addressing domestic imbalances: US savings, Chinese consumption/safety-net reform) requires cooperation he does not sound confident will materialize.

Stablecoins: three different bets. Blustein remains the most skeptical, worried that dollar stablecoins' weak AML/KYC enforcement will undermine the sanctions leverage he considers the dollar's greatest strategic benefit; he notes the Trump family's USD1 is already the world's fourth-largest stablecoin (behind Tether and Circle), which he thinks makes stablecoins durable for political rather than technical reasons. Greeley expects new dollar-denominated liabilities without bank-level protections to eventually fail and be bailed out, expanding the Fed's political footprint whether or not that's desirable—drawing an explicit parallel to how the US tolerated, then had to backstop, the eurodollar market. Eichengreen is the outlier: he expects blockchain payment rails to matter but bets the winning unit will be central bank digital currencies plus tokenized bank deposits—the EU/China model—rather than stablecoins, and questions whether regulators can keep pace with a proliferation of private-issuer coins.