Munich Personal RePEc Archive

Is the US too big to fail?

Reinhart, Carmen and Reinhart, Vincent (2008): Is the US too big to fail? Published in: VoxEU-CEPR (17. November 2008): pp. 1-9.

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Abstract

Why are investors rushing to purchase US government securities when the US is the epicentre of the financial crisis? This column attributes the paradox to key emerging market economies’ exchange practices, which require reserves most often invested in US government securities. America’s exorbitant privilege comes with a cost and a responsibility that US policy makers should bear in mind as they handle the crisis.

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