Grimes' book is well timed to help one understand the political significance of the renminbi's nascent challenge to the dollar. It describes a series of regional arrangements that China, Japan, South Korea, and the ten countries of the Association of Southeast Asian Nations negotiated after the 1997-98 Asian financial crisis to improve liquidity and reduce financial volatility. These efforts were aimed at lessening the countries' reliance on the United States and the International Monetary Fund, and they laid the groundwork for the negotiations now taking place to increase the use of the renminbi beyond China's borders. Grimes makes clear how changes in international financial arrangements have challenged the privilege enjoyed by U.S. households and the U.S. government to run deficits at no immediate cost to themselves. His analysis suggests that even though the renminbi is unlikely to replace the dollar as an international currency, changes in how the two currencies circulate internationally will affect the distribution of economic benefits and political power at the expense of both Washington and Tokyo.
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