Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement

Aug 07, 2026 07:46 · 1:24:30 · English · Whisper Turbo · 6 Speakers
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Ladies and gentlemen,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
first of all,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
welcome all of you in the current event.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So now we publish the latest version of
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
our financial and economic review.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So that's the second one in 2026.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So just some words about the new topic and about the
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
new version of our financial and economic review.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So in the last couple of years we said several times
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
that there are five Ds,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there are five key megatrends which formulate the global
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
economy.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So that's the 5D,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the very high level of global debt,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
decarbonization,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
digitalization,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
deglobalization.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and the fifth one is the demographic,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the worsening demographic trends.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So I think now we are in a good position because I
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
checked the topics we put
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
into the current version of our financial economic review and
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I can say all of these are covered by
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
publication.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So now we have a leading article about the dollar dominance
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in the global financial system.
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of course, we have to talk about the very high level of debt in
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the global economy,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the very high level of debt in the US economy.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So now we have a paper about demographic changes
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and human capital retention,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
rethinking the EU cohesion policy.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So now we have a paper.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
dealing with the demographic challenges.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
After that,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
we have a good article and a very nice paper about the three
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
-block structure of the world economy.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So now we can read about the geoeconomic
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
fragmentation.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in the international trade.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
We have a nice paper about the role of cash in household savings
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
based on the Hungarian case.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
We have a paper about meta -learning model of
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the banking lending behaviour based on Philippine examples.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And finally,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
a paper linked to the decarbonisation.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
We have an ESG readings and financial markets analysis.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the evidence,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
measurement noise and misinterpretation.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So I think it's a good example that the
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
goal of the financial and economic review is that to
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
talk about those topics which are relevant for the world economy and
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
which can be relevant for the Hungarian economy and about those
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
trends which will formulate our life.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in the coming years,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in the coming decades.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So turning to the leading paper and the leading
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
presentation of the current event,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
which is linked to the role of the dollar in the global financial
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
system.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So I remember six or seven years ago,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
many central banks organized conferences on the topic
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
too low for too long.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So that was the key risk for the future,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
that we lived in an era where
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Both the inflation and the interest rates remain at
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
a very low level,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
near to zero.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So what are the risks stemming from this situation?
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And I remember during that time,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there were no questions about the role of the dollar.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So it was obvious that the safest asset in the world is
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the US dollar and the US treasury.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
It was six or seven years ago.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So nowadays...
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Okay, six,
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seven years later.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So the world economy has changed fundamentally.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The inflation returned into our life and become very
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
volatile.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The interest rates are in a more elevated level.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Just one example.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So on average,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the governments globally spend more than 3 % of
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their own GDP on interest bills.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So this number,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
3 .3 % in share of GDP,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
is larger than those many are spent on
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
defense, for example.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So it's clear that we are living in a totally new era.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The unipolar world we have since the 90s ended and
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
we step into the age of geopolitical fragmentation again.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I mentioned the five Ds.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So now we have to talk about the new megatrends,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
how these new megatrends will formulate life in the global
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
economy, in our continent here in Europe and our country
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in Hungary.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So what does it mean for the global financial system?
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I mentioned that seven years ago there was
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
no question about the role of the US dollar.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So nowadays...
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
There are many articles saying the role of the US dollar in
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the global financial system started to change.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
There are pros and cons.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
There are some authors,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there are some economists who are saying
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The role of the dollar started to decrease,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
started to shrink in the global financial system.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Why?
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Because the U .S.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
debt to GDP trajectory seems to
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
me unsustainable,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
maybe. It's hard to see how the U .S.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
government will manage the very large fiscal deficits.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And on the other hand,
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the U .S.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
administration introduced tariffs against a lot of countries in the global economy.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So these are the cons.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
But on the other side,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there are the pros who are still saying,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
okay, the US financial market is still the most developed market
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in the world.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The deepness of the financial market is huge.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Very well developed financial solutions.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So there are no alternatives.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And nowadays on the table.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So I think that's the starting point.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And that's the topic raised by our special
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
guest, Mr.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Massimiliano Castelli.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And that's the point I want to give the floor
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
to Massimiliano to talk about this topic in a more
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
detailed way.
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So let me introduce Massimiliano in a very
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brief way.
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Massimiliano Castelli is the managing director and head of strategy.
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and advice for sovereign institutions at the UBS Asset
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Management.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Massimo,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
thank you very much that you accepted our invitation to
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the current event.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So now the floor is yours.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
We are pretty interested in your thoughts about the role of the dollar nowadays
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and in the future.
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Thank you very much.
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
first of all it should be me the one thank you your institution
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and of course uh andrea and the whole editorial board for the
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kind invitation to publish a paper it was oh sorry the water is
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
planned for me to to
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to publish a paper on this topic,
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and actually there are so many articles,
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
so many...
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
If you read the Financial Times every two,
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
three days or Bloomberg,
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there is an article saying that the dollar is doomed,
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the end is near.
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So I felt,
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
well, we need to do some clarity.
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Before I do that,
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let me just say a few words about me and what I do.
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I've been an economist for many,
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many years, before in academia in Italy,
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at the University of Rome.
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Then I moved into the private sector.
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I worked for five years in London as an emerging market economist
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for a consultancy,
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working largely in ex -Soviet Union countries,
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because my PhD thesis was about ex -Soviet Union countries.
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Nowadays, this seems to me.
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really long time ago.
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At the time,
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we didn't talk about China.
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We only talked about Russia and Central Eastern Europe.
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And then I joined UBS as an
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emerging market economist,
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and I stayed there until the great financial crisis,
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2008 -2009.
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And then in 2010,
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I moved into this team within UBS asset management,
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which is basically in charge of managing assets on behalf of what we call official institution.
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And my role is more on the strategic level to talk to this institution more
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from an asset allocation advice,
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how to build portfolio,
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and of course there is always the element of the
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economics is always on the background when you have this type of conversation.
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So this is a topic very much,
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I found this is an interesting topic,
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S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
you know.
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Maybe I can start by saying every single meeting I go now
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with a sovereign institution being a central bank or a
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sovereign wealth fund or a state -controlled investment vehicle,
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normally the first 15 minutes is about geopolitics.
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What did Trump do?
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What did happen in Europe?
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Can Europe do this?
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Can Europe do that?
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Conflict around the world,
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Ukraine,
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Iran.
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And after 15 minutes,
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when all this is done,
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then you start to talk about investing.
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So what are you doing in your portfolio to adapt to this new
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geopolitical environment?
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Well, we buy dollar,
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we buy treasury,
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we buy equity in US.
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So fundamentally,
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I always find there is a...
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a sort of a disconnect between this world that we observe from a geopolitical
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or political perspective which seems to be very volatile and
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the actual and the reality on the more investment side which actually is more stable
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than what many people think and I think that's
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also a little bit the story of this paper and this paper is
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in the title when I say dissatisfaction without displacement
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What I mean is that,
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and that's exactly the three key messages that I would like to give
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you, is that there is this divergence between declining
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S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
confidence in the institution.
10:00
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
foundation of the dollar,
10:01
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and I will explain what they are,
10:03
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and the persistence of the dollar -centric reserve
10:07
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
portfolio.
10:08
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So there is definitely this,
10:11
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and this is something that I don't think will change in the short
10:15
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
term.
10:16
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
FX reserve management is not something that change very quickly.
10:20
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The change I've been working and consulting with this institution
10:24
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
for more than 15 years now,
10:26
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
change normally very gradual in the work of central banking,
10:30
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
being in monetary policy,
10:31
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
but also on the reserve management side.
10:33
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The reason why there is this divergence is
10:37
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
that there are some structural constraints.
10:40
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
that makes the dollar dominant.
10:41
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And this is question of market debt,
10:44
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the liquidity,
10:45
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
as already was mentioned in the introductory remark,
10:48
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
safe asset supplies,
10:50
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and of course,
10:50
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
all financial infrastructure.
10:52
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The whole system,
10:53
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
basically,
10:54
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
despite all this concern that you might have about the US,
10:58
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
debt is one of them,
10:59
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the rise in debt level,
11:01
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there is still the dollar is very centric.
11:04
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Now, what does it mean in practical terms when we think about effects of asset management
11:08
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
that believe are definitely shifting?
11:10
S… Speaker 4 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
What I mean,
11:12
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in conversation with central banks a few years ago,
11:16
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
we would not talk about Fed independence.
11:18
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
There is a risk to Fed independence.
11:20
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
This was a given.
11:22
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Now there is this conversation.
11:24
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Could the Fed lose its independence in a more extreme scenario?
11:28
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Actually, it's no longer fantapolitic.
11:30
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Could the U .S.
11:31
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
have a U .S.
11:33
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
bond market crisis?
11:34
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Remember what happened after Liberation Day last year in
11:38
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
April? Or could the U .S.
11:41
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and the extensive euro sanction lead to an extensive shift
11:45
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
away from the dollar?
11:48
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And this type of conversation are there.
11:50
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So the beliefs are definitely shifting,
11:51
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
but if you look at the portfolio,
11:53
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and I can give you that for certain,
11:54
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I haven't seen,
11:56
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
for instance, after Liberation Day,
11:57
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
one central bank making a significant move in terms
12:01
S… Speaker 4 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of saying, well,
12:02
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I have 80 % of my reserve in dollar,
12:05
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
maybe I should have 60%.
12:07
S… Speaker 4 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And now,
12:08
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
because still there is still a lot of stickiness
12:13
S… Speaker 3 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in the system.
12:14
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And now the question and the last point I would like to share is what does it mean?
12:17
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
What can we expect in the future?
12:19
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So I think the problem of many of the article
12:23
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and the analysis which is done on the effects reserve management
12:27
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
is that they do not take into account.
12:30
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the real purpose of foreign exchange reserve.
12:33
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
There is this sort of view that central banks have this pot
12:37
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of money, which is there.
12:38
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
In reality,
12:40
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there are operational issues,
12:42
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
which constrain a lot the way FX reserves manage,
12:45
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and you are from a central bank,
12:47
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
you know that very well.
12:48
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
If you think,
12:49
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
that's reflected in the way that the central
12:53
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
bank reserve are invested.
12:54
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
If you look at,
12:56
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and we rely a lot on the UBS survey that we carry out every year,
12:59
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
we've been running this survey for more than 30 years.
13:02
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
It's part of the annual conference that we run in Switzerland in June.
13:05
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
32 years that I have the honor of organizing
13:09
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
already for nearly a decade.
13:11
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
You see the capital preservation,
13:13
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
liquidity.
13:15
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
are the two dominant investment objectives.
13:17
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
When you have these two dominant investment objectives,
13:20
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
your investment profile changes completely.
13:22
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
If I compare this to a sovereign wealth fund,
13:25
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
we are talking about a completely different investment profile.
13:27
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Return maximization is the main primary goal in
13:32
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
terms of investment of sovereign wealth funds.
13:37
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So that's the operational framework within which FX
13:42
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
reserve are invested.
13:43
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And I think that's very,
13:45
S… Speaker 3 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
very important.
13:45
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
However,
13:46
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there is this question about belief.
13:50
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And let me focus on that before trying to pull together
13:54
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in terms of what we can expect for the future.
13:56
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So one of the questions that we ask every year in the survey is,
14:00
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
what are your top three concerns?
14:02
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And if I look back over the last 30 years,
14:06
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the concern that there were always a rise in interest rates,
14:11
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
an expected increase in interest rates,
14:13
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
volatility in financial market,
14:15
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
maybe effects issues.
14:18
S… Speaker 4 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Nowadays,
14:19
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
if you look at years after year,
14:21
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
particularly after the first Trump presidency,
14:24
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
things like...
14:25
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
trade war,
14:26
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
escalation in conflict,
14:29
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Russia,
14:31
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
U .S.,
14:32
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Russia,
14:33
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
U .S., China,
14:34
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Middle East,
14:35
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they have become dominant.
14:38
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
This has become the most important always factor
14:42
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
that are mentioned by the central bank officials themselves when
14:46
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
we ask this question.
14:48
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And this is something which has made,
14:49
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I think has created a completely different type of conversation and narrative
14:54
S… Speaker 3 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
around it.
14:54
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Once you start to think about deglobalization,
14:57
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
you mentioned the 4D.
15:00
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
You think about deglobalization,
15:01
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
you think about trade war,
15:03
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
you think about debt sustainability.
15:05
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The question is not anymore,
15:08
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
okay,
15:08
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I should invest by being liquid and
15:12
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
get a reasonable return.
15:14
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
That's the capital protection objective.
15:17
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
But actually,
15:18
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I also have to think about what could happen to my FX reserve if
15:22
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
things turn in a certain way.
15:24
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Can I still,
15:26
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I will be able to pull my money out?
15:28
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Will I be subject to sanctions,
15:30
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
direct or indirect,
15:32
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
if politically I take it?
15:33
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I'm talking here from a global perspective,
15:35
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
not just from a European perspective.
15:37
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
But think if you are a central bank in Asia and you are
15:41
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
doing a lot of trade with China.
15:43
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Malaysia, Korea,
15:45
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
these countries have 50 % of their trade with China.
15:48
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
They could be subject to indirect sanction one day.
15:50
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
If the U .S.
15:51
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
decide to eat a company which trade with Korea selling,
15:54
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I don't know, drones,
15:55
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they could be subject to sanctioning directly or indirectly.
15:59
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
What would it mean for my U .S.
16:01
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Treasury holding?
16:02
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I'll just give an example of how geopolitics come into the picture.
16:05
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Or if Europe fail to integrate or
16:09
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there is political escalation in Europe.
16:11
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
which is also a scenario that we cannot rule out,
16:14
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
what would happen to the euro?
16:15
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Can we expect something?
16:17
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
This type of question becomes very common.
16:20
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And of course the question about the dollar
16:24
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
are probably the most important one for the very simple reason that anything
16:28
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
which move around in global capital market in a way or another pass through
16:32
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the dollar.
16:34
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And this is another result,
16:36
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
actually, in the paper,
16:37
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I think I put the 2025 results.
16:40
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
These are from the survey of June 2026.
16:42
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
You see,
16:43
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
when we ask which of the following factors are at risk of substantial deterioration,
16:47
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
actually,
16:48
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I was surprised to see social cohesion.
16:50
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I guess this is about midterm election expectation.
16:53
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
They're afraid that there will be a civil war in the U .S.
16:56
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
if Trump loses the midterm election.
16:58
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
But also independence of the U .S.
17:00
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Federal Reserve,
17:00
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
data quality.
17:02
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
which is also a very important factor.
17:04
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
This is not just about the US,
17:07
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
by the way.
17:07
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Think about China.
17:08
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
China doesn't publish anymore of unemployment data,
17:12
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
which is also something that,
17:13
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of course, when you're an investor from outside,
17:15
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
you will look at this type of issues.
17:17
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The rule of law,
17:18
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
etc.
17:22
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And the funny thing is that then we ask another question.
17:25
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So definitely there is a growing concern among
17:29
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
investors,
17:30
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
including central banks as a reserve manager,
17:33
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
about what's happening in the U .S.
17:35
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And then we ask the second question is,
17:37
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
how do you expect the demand for U .S.
17:40
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
debt and U .S.
17:40
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
dollar develop in the future?
17:42
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And you can see that there is no panic at all,
17:45
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
actually, about the majority.
17:48
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
more than 60%,
17:49
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
demand will stagnate and U .S.
17:52
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
yield will gradually rise.
17:53
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
We can debate about this,
17:54
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
but what I mean, there is no way we are going to reduce or demand for
17:58
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
U .S. Treasury will fall.
18:00
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The same story about the dollar.
18:02
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
The U .S.
18:03
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
dollar will stagnate and U .S.
18:04
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
pro...
18:05
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So basically you have this belief shifting,
18:07
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
but at the same time,
18:09
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the demand for U .S.
18:10
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
dollar asset being bonds,
18:12
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
but it could also be equity.
18:14
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
We should not forget many central banks nowadays are invested into equity.
18:18
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So there are some of the largest central banks,
18:21
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Swiss National Bank,
18:23
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
these are all public information,
18:24
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Central Bank of Israel,
18:25
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they have 20,
18:26
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
25, 30 % of their reserve in equity and they have a large exposure to U
18:31
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
.S. equity market,
18:32
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
to the AI story,
18:33
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
etc. And that's a very important factor of attraction
18:37
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of capital into the U .S.
18:40
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
There is this total disconnect.
18:43
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So that's where we are.
18:44
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
So the question is why?
18:45
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And I go fast because I'm looking at the watch and I want to have the opportunity to take questions
18:49
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and having the debate in the panel.
18:51
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
But first of all,
18:52
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
there is a question of a structural constraint.
18:55
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And I think that's exactly the explanation for why the
18:59
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
dollar is still dominant despite this shifting.
19:01
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
One example is a central bank's network that swaps your
19:06
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
central bank.
19:07
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I don't need to tell you what they are.
19:09
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
But fundamentally,
19:10
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the central banks,
19:12
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the US Federal Reserve ability to provide liquidity is
19:16
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
in principle infinite.
19:19
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
That's one definition that I saw in some literature.
19:21
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Fundamentally,
19:23
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
if they need,
19:23
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they are able to give as much liquidity as needed.
19:26
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And if you look at over the last episode of financial crisis,
19:31
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
it has always been the Fed,
19:32
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
the ultimate provider of liquidity.
19:34
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
It happened in 2008.
19:35
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
It happened in other episodes.
19:37
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And why you mentioned...
19:40
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
if you look at the next the pboc might as a lot of swap
19:45
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
agreement as you know they try to push the internationalization
19:49
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of the rmb but i mean i would say that it's not
19:53
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
perceived definitely the pbc is a ultimate safe land lender
19:57
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of last resort for sure and
20:00
S… Speaker 3 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
This is very,
20:01
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
very important because if you look at,
20:03
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
for instance, now at the debate in Europe,
20:05
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
you hear that there is a lot of debate about the increasing the supply
20:10
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of euro bonds because there is not enough paper out there.
20:13
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
If you want to have,
20:15
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
if you think about the central bank managing 1 .5 trillion
20:19
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
of assets and they decide to move,
20:22
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
let's say, 10 billion of government bonds,
20:25
S… Speaker 1 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
investment grade.
20:27
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I mean, and then they say,
20:29
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
okay, let's buy 10 billion of euro bonds.
20:32
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
Well, they start to have,
20:33
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they start to do a lot of homework.
20:35
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
They start to,
20:36
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
because they will not buy only euro bonds,
20:38
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they will have to buy Tresor,
20:39
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they will have to buy BTP,
20:41
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they will have to buy boons.
20:43
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
And I remember very well,
20:45
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
I was in Malaysia just after Liberation Day,
20:48
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
and I was talking to a central bank,
20:49
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
they were panicking about the dollar and say,
20:51
S… Speaker 2 (Dollar dominance in the Global Financial System_ Dissatisfaction without Displacement)
oh my God, we need to buy euro.

This transcript was generated by AI (automatic speech recognition). May contain errors - check against the original audio for critical use. Politikkur

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