The CEO of fixed-income giant Pacific Investment Management Company (PIMCO) is expressing optimism on the future of the US and the dollar in the global financial system.
PIMCO CEO Emmanuel Roman says in a new Bloomberg interview that he believes America will maintain its position as the world’s safe haven despite concerns about its eroding balance sheet and Trump’s trade war.
According to Roman, the US owns the world’s reserve currency, and there’s no viable currency that could usurp the dollar.
“And [the US] will remain as the place of safe haven…
Well, think about it. The US dollar is the reserve currency, but it’s also the most liquid Treasury market in the world by an enormous factor.
And yes, you can make a reasonable argument that the dollar is slightly expensive and you may want to diversify from the dollar to other currencies, but it doesn’t mean that the dollar loses its status. And I think it’s very important to keep that in mind. There’s no other reserve currency. There’s no other place to move trillions and trillions of dollars away from the dollar. And it is what it is.”
The PIMCO CEO further says that “American Exceptionalism” also contributes to the popularity of the dollar and US Treasuries among global investors. American Exceptionalism refers to the idea that the US is superior to other nations in terms of values, political system and historical development.
“The fact that the financial systems are very liquid and very well run. And that if you, for example, a Japanese investor, where there’s about $1 trillion of US debt held by Japanese institutions, it’s a good place to be. Even a hedge against the yen. And I think that’s really an important fact to remember in terms of the flow of funds and who needs to put money where.”
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