The Global Imbalances and the Contradictions of US Monetary Hegemony


Year of publication: 2010
Author(s): Mattias Vermeiren
Appeared in: Journal of International Relations and Development, vol.: 13, issue: 2, 105-135


Over the last decade the world economy has been characterised by escalating global currentaccount imbalances between the United States and East Asia in particular. This article arguesthat US monetary hegemony has been a necessary condition for the emergence of theseimbalances. It is contended that the notion of structural power is indispensible to understanding the nature of US monetary hegemony and its relation to the imbalances. US monetary structural power has both induced East Asian states to increase their accumulationof dollar-denominated assets and allowed the US to decrease its savings. The article also shows that the mechanisms of US structural monetary power contain several contradictory dynamics that are able undermine its own purpose, which is to avoid to burden of adjustmentto balance-of-payments disequilibria.