It has become fashionable to speculate on the future of the US dollar as the world's reserve currency. Amid an average 10 per cent decline in the past six months, analysts have tended to favour one of two conclusions. Some argue that, since you cannot replace something with nothing, the dollar's global role is secured. Others feel that America's medium-term prospects are now inconsistent with such a role.

As with many post-crisis issues, the reality is much more complex. This is not just because the dollar will be caught between these two extremes in the muddled middle for the foreseeable future, but also because the dollar is part of a bigger picture that concerns the evolving role of the US as the sole provider of a range of global public goods. At a time when the global system needs such anchors, this uncertainty raises a set of important policy issues.

A couple of decades ago, Charles Kindleberger, the economist best known today as the author of Manias, Panics and Crashes, identified five public goods that support a growth-oriented global economy: (1) acting as a consumer of last resort, (2) coordinating macro-economic policies, (3) supporting a stable system of exchange rates, (4) acting as a lender of last resort, and (5) providing counter-cyclical long-term lending.