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Exorbitant privilege: the rise and fall of the dollar

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On February 4, 1965, the French president General Charles de Gaulle, addressing a gathering of journalists, delivered a visceral attack on the special status of the dollar under the Bretton Woods system. “The fact that many states accept dollars as equivalent to gold,” he said, “In order to make up for the deficits of [the] American balance of payments has enabled the United States to be indebted to foreign countries free of charge. Indeed, what they owe those countries, they pay ... in dollars that they themselves can issue as they wish. ... This unilateral facility attributed to America has helped spread the idea that the dollar is an impartial, international [means] of exchange, whereas it is a means of credit appropriated to one state." Valery Giscard d’Estaing, then the finance minister of France, coined the phrase “exorbitant privilege” to describe the international hegemony of the dollar...

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