The Financial Times reports that the value of euro notes in circulation worldwide now exceeds the value of dollar notes. This should tell us two things. First, the dollar is not essential to world finance. People are happy to hold euros and other currencies, no one needs to hold dollars. Second, the euro passing the dollar is not some sort of cataclysmic event. As long as people still have faith in the basic soundness of the dollar, they will be happy to hold it, even if it slides to number 2 by some measures. Of course, if investors become convinced that the currency is on a downward path, then it could lead to a serious run. In short, the world does not need the dollar, but it is also not anxious to throw it in the toilet, or at least not yet.
--Dean Baker
