Belgian-Australian economist Robert Triffin’s dilemma represents the conflict of economic interests that arises when a national currency plays a role as an international public good – for countries whose currencies serve as global reserve currencies. In the modern era, the US dollar replaced sterling as the world’s main reserve currency following World War I, after European countries abandoned the gold standard.
Speaking before the US Congress in 1960, Triffin testified to the inherent instability of having more dollars in circulation than the amount of gold backing them. Triffin’s prediction that the system would break came true and US president Richard Nixon abolished the gold standard in 1973.
One modern extension of Triffin’s view – countered by Michael Bordo and Robert McCauley in their 2017 Bank for International Settlements working paper, Read More