As a result, adverse supply shocks, such as an increase in oil prices, have a reduced impact on inflation and economic activity and, at the same time, monetary policy has more leeway to respond to such shocks.
This means global economic and financial activity is highly dependent on the ability of U.S. dollar funding to flow smoothly and efficiently between users. In contrast to bank intermediation, market-based financing in U.S. dollars has outpaced the growth of the global economy.