FROM PAGE B4

Stephen Miran, the incoming chair of the US Council of Economic Advisers, believes the dollar’s global hegemony has resulted in the persistent overvaluation of the currency, with damaging effects on the country’s trade competitiveness. In a paper published last November, Miran proposed that international demand for dollars could be dampened if the United States imposed a tax on interest payments paid to foreign official holders of US government debt. The Hungarian-American economist Zoltan Pozsar has gone even further, suggesting that dollar-denominated foreign exchange reserves should be swapped into zero-coupon 100-year bonds – essentially a worthless asset.

Miran argues that countries that benefit from America’s security umbrella should share more of the burden imposed by the currency standard. The trouble is that, except for Japan, American military allies don’t hold large amounts of dollars in their foreign reserves.