The dollar’s role as the world’s leading reserve currency is at risk because of the political impasse in the United States, which has raised fears of a debt default, European Central Bank policymaker Ewald Nowotny said.
“If it really comes to a collapse, no one knows exactly what will happen. One expects that there are chances to postpone the effects but by the end of the year at the latest it will be rather dramatic,” Nowotny told Austrian broadcaster ORF in an interview aired on Saturday.
“It is apparent that it is extremely dangerous when the politics of a country whose currency is the world currency – it is still the most important currency – are driven primarily by very narrow domestic considerations,” he added.
“This discrepancy is very dangerous and in my view will have a negative impact on the long-term role of the dollar.”
Full article: Dollar’s reserve role at risk from US budget uncertainty: ECB’s Nowotny (CNBC)