Reserve currencies and solving the new Triffin dilemma

One of the most puzzling aspects of the present global crisis is the fact that despite the vast accumulation of central bank reserves, mostly denominated in dollars, the international economy had been subject to a severe and sudden shortage of dollar liquidity. The increasing share of the official sector in US Treasury securities has raised repeated concerns - in particular with regard to its effect on interest rates, the dollar and valuation of central banks' balance sheets.1 This article su