D Dollar Standard and Imperialism Ramaa Vasudevan Department of Economics, Colorado State University, Fort Collins, CO, USA Capital exports played a key role in Lenin’ s anal- ysis of imperialism at the turn of the twentieth century. In a curious breach of Lenin’ s formula- tion, the dominant imperialist power in the con- temporary global economy, the US, is a major importer of capital. The growing debt of the US is, however, not a reflection of a decline in impe- rialist hegemony but rather of its strength. The puzzle of an imperialist country that holds the bulk of the global balance of payments deficits can be explained by the privileged position of the dollar globally as the dominant key currency. The dollar is the main currency used to denomi- nate and settle international transactions. The fact that the rest of the globe uses dollars for its inter- national dealings places the US in a unique posi- tion to exercise an ‘exorbitant privilege’ over the rest of the world. The US can finance its external debt and deficits by issuing its own monetary liabilities, thus enjoying an elastic credit line that is not available to most other countries. Dominance in the international financial sys- tem has allowed the US an easy access to global savings and has given rise to the growing global imbalances that emerged in the first decade of the twenty-first century. The emergence and persis- tence of global imbalances is a reflection of the international hegemony of the dollar and the cen- tral role that the US has come to play in sustaining global demand. In 2007, when the subprime mar- ket was unwinding, the dollar entered on one side of about 88% of all foreign exchange transactions, while its closest competitor, the euro, entered on one side of 36% of foreign exchange transactions. At the same time about 61% of foreign exchange reserves were held in dollars, while the euro share of foreign exchange reserves was about 26% in 2007. The crisis triggered by the collapse of the sub- prime market in the US brought the hegemonic role of the dollar into sharp focus. Far from setting off a run on the dollar, the complete seizure of financial markets, after the fall of Lehman in 2008, precipitated a global flight to the dollar safe haven. There was a surge in the global demand for US treasury bills and the US Federal Reserve had to extend dollar swap lines to over- seas central banks that sought dollar liquidity. The crisis reflected the contradictions of an inter- national monetary system hinged on the dollar standard (Vasudevan 2009a). The key question is whether it also presages the end of the dominance of the dollar or the decline of the US imperial power. This chapter explores the implications of the dollar ’ s international role for the working of impe- rialism. Drawing on Vasudevan (2008), it traces the history of the emergence and evolution of the © The Author(s), under exclusive licence to Springer Nature Switzerland AG 2020 I. Ness, Z. Cope (eds.), The Palgrave Encyclopedia of Imperialism and Anti-Imperialism, https://doi.org/10.1007/978-3-319-91206-6_203-1