Triffin Dilemma and Regional Monetary Approach : An Appraisal

Abstract

Robert Triffin (1960) was the first to formalize that , under the gold exchange standard , the key currency issuing country faced a dilemma. Either the United States would stop providing more dollar balances for international finance , leading to trade stagnation and deflationary bias in the global economy ; either the United States would continue to provide more of the international reserve currency , leading ultimately to a loss of confidence in the dollar. This paper shows that the formulation of this dilemma is the consequence of Triffin ' s early critics of the Bretton Woods system in the 1940s leading him to advocate a reform of the international monetary system at the regional level , ie. the European one , in the 1950s .