Business Case Studies & Business Publications

The World’s Next Reserve Currency

Warnock, Frank, Ch...

Case

The World’s Next Reserve Currency

Warnock, Frank; Chandler, Marc

GEM-0211 | Published November 11, 2024 | 28 pages Case

Collection: Darden School of Business

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In February 2025, Rashonda Williams, responsible for global asset allocation at a large pension fund, was pondering the US dollar's long-term prospects. Since at least 1956, the dollar had been the king of the currency universe, the world's reserve currency, but was it on the decline? And if so, what might replace it? Gold? Cryptocurrency? The euro? The Chinese yuan? Special Drawing Rights? Notwithstanding the plethora of scenarios swirling around in her head, Williams had to take a firm stand on whether she thought the dollar would appreciate or depreciate over the next 5 to 10 years. She had been asked by her fund's board of directors for a thorough assessment of the US dollar. Was the dollar’s appreciation over, and if so, should the fund increase the allocation to foreign-currency-denominated assets? Or was the dollar still far below its “long-term value” and more likely to resume appreciating? If so, should the fund take profits on its foreign positions and increase the weighting on US securities?