Discuss policies to stop the dollar falling - Essay Example

Policies that stop the dollar from falling Policies that stop the dollar from falling Systematic reforms The economic modifications need to embrace both a change in the rules and tough enforcements of such rules. It is easier to formulate the rules to deter the dollar from falling, but if the there is no implementation of these rules then nothing is being done, and threats will continue ailing the dollar. In the attempt to achieve this situation, the concerned institutions must receive thorough revisions to legitimize their potentials, promote acceptability, and sustainability. For instance, a much-needed reform has a likelihood of occurring via the multi-polarization of the regime’s global currency. Bergstein (2013) notes that there has been a decline in the role of the dollar over the past three decades, and will largely continue falling. Hence, fast reforms need instigation in both the institutions and the enforcement of the rules. Achievement of these alterations can be through amendments to the charter via developed consensuses. All the institutions will then have determination toward the achievement of the goals set.
Increasing the interest rates
In attempt to halve the slides of US dollar, the government needs to increase its interest rates. The greater the interest rates, the higher the attraction of investors and hence saving pumping in cash that will stabilize the falling of the dollar. Additionally, the high-interest rates will ensure increased savings and lead to declined spending. The situation will facilitate the reduction of imports made into the USA thus helping the dollar to appreciate in value. However, this situation might lead to lowered growth and a spare capacity in the economic state of the USA (Dubil, 2005).
References
Bergsten, C. F. (2013). Currency Wars, the Economy of the United States and Reform of the International Monetary System. Testimony before the Committee on Ways and Means, US House of Representatives.
Dubil, R. (2005). Lifetime Dollar-Cost Averaging: Forget Cost Savings, Think Risk Reduction. Journal of Financial Accounting, 3(4) 86-90 Read More