3/5  What could be the potential consequences should the dollar's status as the world's reserve currency significantly diminish, especially if foreign investors reduce their rate of accumulation of claims on U.S. residents? Most analysts would contend that U.S. interest rates were lowered by the world's accumulation of dollars.
Accordingly, in the event of a significant diminishing of the dollar's reserve currency status, U.S. interest rates would presumably rise. Although I doubt that the U.S. dollar will lose its status as the world's reserve currency any time soon, there are, in my judgment, lessons to be learned from the experience of sterling as it faded as the world's dominant currency.